Min Zhang Professor
Accounting
Research direction:
Corporate Governance, Corporate Finance, Audit
Lecture course:
Auditing, Thesis Writing, Accounting Principles (for Undergraduates);Auditing Literature Research, Thesis Writing and Submission, Empirical Finance (for Master-Doctoral Students);Risk and Risk Management, Financial Analysis (for Professional Master Ca
Abstract：
This study adds to the literature on mandatory rotation of audit partners in Chinese companies by examining the effect of the pre-rotation relationships between incoming and outgoing partners. We consider the rotating partners to have prior working relationship if they were cosigners of audit reports before the rotation. We find two different outcomes of having prior working relationship: (a) increasing the likelihood that outgoing partners rotate back after the cooling off period, and (b) lower audit quality improvement after rotation. These findings bring into question the extent to which rotating partners with prior working relationships are truly independent.