Accounting Personnel Quality, Audit Risk, and Auditor Responses

SUMMARY This study draws on human capital theory to measure the quality of accounting personnel based their education level and investigate whether client firm’s affects auditors’ assessment audit risk by examining outcomes. It shows that auditors charge higher fees are more likely make adjustments for companies whose have a lower education. The relationship between (audit adjustments) is robust an instrumental variable model, entropy balancing approach, difference-in-differences analysis. Audit firms strategically assign experienced partners personnel’s average levels relatively low. Taken together, these findings suggest clients’ JEL Classifications: M40; M42; J01; J24.