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Partners’ Continuity at the Audit Team Level: Determinant of and Its Effects on Audit Outcomes

This study aims to examine the relationship between audit outcomes and partners’ continuity at the audit team level. The audit outcomes are examined from three perspectives: audit quality, pricing, and timeliness. Using a sample of listed Japanese companies from 2008 to 2019, we find that clients of smaller audit firms experience lower quality audits when consecutive audit engagements share a higher degree of similar partners. Partners’ continuity also affects audit pricing and efficiency for clients that have established long-term tenure with Big N auditors. Clients of large auditors with a stable composition of partners over consecutive audit engagements pay lower audit fees and perform a more efficient audit. The study finds that the experience of lead partners is a strong predictor of partners’ continuity at the audit team level, irrespective of the size of audit firms.