(Prob(Misstate=1)t) 0.01 0.08 0.00 0.00 0.00 0.00 1.00
Reputation_Firmt-1 0.79 0.40 1.00 1.00 1.00 0.00 1.00 Reputation_Partnert-1 0.13 0.34 0.00 0.00 0.00 0.00 1.00
PARTNER EXPERTt 0.04 0.19 0.00 0.00 0.00 0.00 1.00
LASSETt 14.88 1.31 13.92 14.74 15.66 11.54 18.50
∆ASSETt 0.14 0.32 -0.03 0.07 0.22 -0.36 2.28
AR_INt-1 0.32 0.19 0.18 0.29 0.43 0.00 0.97
FOREIGNt-1 0.45 0.36 0.06 0.44 0.79 0.00 1.01
FINANCINGt-1 0.38 0.49 0.00 0.00 1.00 0.00 1.00
LISTEDt 0.73 0.44 0.00 1.00 1.00 0.00 1.00
OWNERSHIPt-1 0.30 0.17 0.17 0.27 0.40 0.00 1.00
LEVt-1 0.40 0.18 0.27 0.39 0.51 0.04 0.96
PARTNER_INDEXPt 9.78 4.41 6.00 9.00 13.00 1.00 20.00
PARTNER_EXPt 12.01 4.74 8.00 12.00 15.00 3.00 23.00
PARTNER_TENUREt 5.74 3.57 3.00 5.00 8.00 1.00 16.00
ROAt-1 0.04 0.11 0.00 0.05 0.10 -0.43 0.31
FIRM_TENUREt 9.20 5.25 5.00 8.00 12.00 1.00 23.00
LBOARD_SIZEt-1 1.99 0.29 1.79 2.08 2.08 1.39 3.00
LOSSt-1 0.23 0.42 0.00 0.00 0.00 0.00 1.00
STD_CFOt 0.12 0.13 0.05 0.08 0.14 0.01 0.92
HERFt-1 0.06 0.07 0.02 0.03 0.06 0.01 0.37 See the Appendix for variable definitions.
30
Table 2
Pearson Correlation Matrix
VARIABLE (N=13,505) 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
MISSTATE (Prob(Misstate=1)t) 1 -Reputation_Firmt-1 2 0.00 -Reputation_Partnert-1 3 0.03 0.11
-PARTNER EXPERTt 4 0.00 0.04 0.09
-LASSETt 5 0.03 0.01 0.01 0.20
-∆ASSETt 6 -0.01 0.04 0.05 -0.02 0.02
-AR_INt-1 7 -0.01 0.03 0.02 -0.07 -0.14 0.10 -FOREIGNt-1 8 -0.04 0.01 -0.04 -0.08 0.00 0.01 0.00 -FINANCINGt-1 9 0.01 0.06 0.03 0.00 0.17 0.04 0.02 0.04
-LISTEDt 10 0.01 -0.03 -0.02 0.06 0.43 -0.11 -0.08 0.02 0.08 -OWNERSHIPt-1 11 -0.03 0.02 0.03 -0.01 -0.23 0.14 0.05 -0.09 -0.07 -0.35
-LEVt-1 12 0.05 0.00 0.03 -0.01 0.13 -0.06 0.35 -0.12 0.12 -0.09 0.03 -PARTNER_INDEXPt 13 -0.01 -0.01 0.07 0.02 0.06 -0.02 0.01 0.10 0.01 0.07 -0.07 -0.06
-PARTNER_EXPt 14 0.01 -0.01 0.09 0.03 0.06 -0.03 -0.02 -0.01 0.01 0.05 -0.02 0.01 0.79 -PARTNER_TENUREt 15 0.01 -0.04 0.01 0.03 0.19 -0.08 -0.07 -0.06 0.05 0.20 -0.09 -0.03 0.52 0.46
-ROAt-1 16 -0.06 0.02 0.00 0.01 0.09 0.37 0.05 0.09 -0.02 0.01 0.15 -0.21 0.01 -0.01 -0.02 -FIRM_TENUREt 17 0.00 -0.08 -0.07 0.11 0.41 -0.20 -0.18 -0.01 -0.05 0.39 -0.23 -0.07 0.13 0.11 0.40 -0.03 -LBOARD_SIZEt-1 18 0.00 -0.02 -0.02 0.15 0.32 -0.08 -0.17 -0.06 0.03 0.16 -0.03 -0.05 0.00 0.02 0.07 -0.03 0.14
-LOSSt-1 19 0.06 -0.01 0.00 -0.03 -0.09 -0.28 -0.09 -0.03 0.00 -0.01 -0.12 0.13 0.00 0.00 0.00 -0.72 -0.01 0.01 -STD_CFOt 20 0.01 0.06 0.03 -0.05 -0.17 0.26 0.30 0.01 -0.04 -0.24 0.13 0.06 0.00 -0.04 -0.13 0.05 -0.28 -0.14 0.00
-HERFt-1 21 0.02 0.04 0.01 0.14 0.18 0.11 0.25 0.21 0.04 0.15 0.00 0.00 0.11 0.05 0.13 0.00 0.25 0.13 0.02 0.20 -Bolded correlations of magnitude of 10% or higher that are significant at p < 0.05. Italicized and bolded correlations denote important significant correlations of smaller
magnitude.
31
Table 3
Partner Reputation and the Likelihood of Future Misstatements Panel A: General Relation
Logit Regression: Prob(Misstate=1)t p-value
Intercept -8.51*** 0.00
Reputation_Partnert-1 0.52** 0.03
Reputation_Firmt-1 0.06 0.83
Year fixed effects Included
Industry fixed effects Included
N 13,505
Pseudo R2 0.14
Area Under the ROC Curve 0.83
This panel summarizes the results of logisticlogistic regressions of probability of accounting misstatement in the next year on historical partner reputation for misstatements measured over preceding year. The sample period is from 1995 through 2010. Two-tailed p-values are based on cluster-robust standard errors (clustered by audit firm). *,
**, *** denote significance of 0.1, 0.05, and 0.01 level, respectively. See the Appendix for variable definitions.
32
Panel B1: Using past misstatements to predict future misstatements over two year horizon
Logit Regression: Prob(Fut2_Misstate=1)t p-value
Intercept -6.86*** 0.00
Reputation_Partner2t-1 0.19* 0.08 Reputation_Firm2t-1 0.02 0.34
PARTNER EXPERTt -0.72 0.23
PARTNER_INDEXPt 0.02 0.48
PARTNER_EXPt 0.01 0.64
PARTNER_TENUREt -0.04 0.21
ROAt-1 -3.21*** 0.00
This panel summarizes the results of logisticlogisticregressions of probability of accounting misstatement in the next two years on historical partner reputation for misstatements measured over preceding two year period. The sample period is from 1995 through 2010. Two-tailed p-values are based on cluster-robust standard errors (clustered by audit firm). *, **, *** denote significance of 0.1, 0.05, and 0.01 level, respectively. See the Appendix for variable definitions.
33
Panel B2: Using past misstatements to predict future misstatements over three year horizon
Logit Regression: Prob(Fut3_Misstate=
1)t
p-value
Intercept -6.95*** 0.00
Reputation_Partner3t-1 0.19** 0.05 Reputation_Firm3t-1 0.01 0.52
PARTNER EXPERTt -0.38 0.47
PARTNER_INDEXPt -0.01 0.69
PARTNER_EXPt 0.00 0.65
PARTNER_TENUREt -0.03 0.45
ROAt-1 -3.12*** 0.00
This panel summarizes the results of logistic regressions of probability of accounting misstatement in the next three years on historical partner reputation for misstatements measured over preceding three year period. The sample period is from 1995 through 2010. Two-tailed p-values are based on cluster-robust standard errors (clustered by audit firm). *, **, *** denote significance of 0.1, 0.05, and 0.01 level, respectively. See the Appendix for variable definitions.
34
Panel C: Using restatements to predict future misstatements
Logit Regression: Prob(Misstate=1)t p-value
Intercept -7.30* 0.00
Reputation_Partner_RESTt-1 0.44** 0.02 Reputation_Firm_RESTt-1 0.21 0.22
PARTNER EXPERTt -1.79* 0.053
PARTNER_INDEXPt 0.01 0.71
PARTNER_EXPt 0.02 0.60
PARTNER_TENUREt -0.06* 0.10
ROAt-1 -3.50* 0.00
This table summarizes the results of logistic regressions of probability of accounting misstatement in a particular year on historical partner reputation for restatements. Sample period is 1995-2010.Two-tailed p-values are based on cluster-robust standard errors (clustered by audit firm). *, **, *** denote significance of 0.1, 0.05, and 0.01 level, respectively. See the Appendix for variable definitions.
35
Table 4
Partner Reputation and Likelihood of Misstatements
Panel A: The effects of partner experience and tenure on the relation between partner reputation and likelihood of misstatements
(1) (2) (3) (4)
logistic Regression: Prob(Misstate=1)t Coef
p-value Coef
p-value Coef.
p-value Coef. p-value Reputation_Partnert-1 1.17*** (0.000) 1.00*** (0.000) 0.61* (0.059) 1.28*** (0.000) Reputation_Firmt-1 0.07 (0.792) 0.10 (0.695) 0.06 (0.828) 0.11 (0.680)
Reputation_Partnert-1*LONG EXPt -1.42*** (0.000) -1.19** (0.015)
LONG EXPt 0.20 (0.527) 0.01 (0.978)
Reputation_Partnert-1*LONG IND EXPt -1.01*** (0.003) -0.42 (0.333) LONG IND EXPt 0.58*** (0.007) 0.39* (0.100)
Reputation_Partnert-1*LONG PARTNER TENUREt -0.11 (0.819) -0.01 (0.986) LONG PARTNER TENUREt 0.08 (0.816) 0.00 (0.995) PARTNER EXPERTt -1.03 (0.107) -0.96 (0.121) -0.92 (0.142) -1.00 (0.129) LASSETt 0.28*** (0.005) 0.28*** (0.006) 0.27*** (0.008) 0.28*** (0.004)
∆ASSETt 0.14 (0.544) 0.14 (0.528) 0.14 (0.538) 0.15 (0.533) AR_INt-1 -1.40* (0.091) -1.33 (0.106) -1.38* (0.084) -1.42* (0.086) FOREIGNt-1 -0.41* (0.090) -0.42* (0.086) -0.44* (0.067) -0.41 (0.103) FINANCINGt-1 -0.12 (0.523) -0.10 (0.566) -0.10 (0.591) -0.13 (0.478) LISTEDt 0.12 (0.688) 0.09 (0.744) 0.07 (0.825) 0.11 (0.729) OWNERSHIPt-1 -1.52*** (0.003) -1.49*** (0.006) -1.52*** (0.006) -1.45*** (0.006) LEVt-1 2.09*** (0.000) 2.04*** (0.000) 2.03*** (0.000) 2.09*** (0.000)
36
PARTNER EXPt 0.00 (0.949) 0.01 (0.603) PARTNER INDEXPt 0.03 (0.211) -0.01 (0.725) PARTNER TENUREt -0.05 (0.174) -0.05** (0.042)
ROAt-1 -2.20** (0.018) -2.27** (0.013) -2.25** (0.013) -2.21** (0.017) FIRM TENUREt 0.00 (0.960) 0.01 (0.789) -0.01 (0.699) -0.01 (0.511) LBOARD_SIZEt-1 -0.46 (0.183) -0.51 (0.140) -0.54 (0.122) -0.49 (0.163) LOSSt-1 0.74*** (0.004) 0.72*** (0.006) 0.73*** (0.006) 0.75*** (0.003) STD_CFOt 1.55** (0.041) 1.58** (0.034) 1.60** (0.027) 1.53** (0.038) HERFt-1 -1.83 (0.670) -1.64 (0.719) -1.50 (0.715) -1.45 (0.737) INTERCEPT -8.90*** (0.000) -8.67*** (0.000) -8.44*** (0.000) -8.90*** (0.000)
N 13505 13505 13505 13505
Pseudo R-sq 0.15 0.15 0.14 0.15
Area under ROC Curve 0.83 0.83 0.83 0.83 This table summarizes the results of logistic regressions of probability of accounting misstatement in a particular year on historical partner reputation for misstatements. Sample period is 1995-2010 Two-tailed p-values are based on cluster-robust standard errors (clustered by audit firm). *, **, *** denote significance of 0.1, 0.05, and 0.01 level, respectively. See the Appendix for variable definitions.
37
Panel B: The effects of partner experience and tenure on the relation between partner reputation measured using restatements and likelihood of future misstatements
(1) (2) (3) (4)
logistic Regression: Prob(Misstate=1)t Coef
Reputation_Firm_RESTt-1 0.21 0.20 0.22 0.20 0.23 0.19 0.23 0.17
Reputation_Partner_RESTt-1*LONG EXPt -0.48 0.27 -0.58 0,45
LONG EXPt -0.07 0.80 -0.19 0.56
38
PARTNER TENUREt -0.06 0.10 -0.07** 0.02
ROAt-1 -3.50** 0.00 -3.46*** 0.00 -3.59*** 0.00 -3.59* 0.00 FIRM TENUREt -0.01 0.66 -0.00 0.75 -0.02 0.44 -0.02 0.36
LBOARD_SIZEt-1 -0.44 0.24 -0.44 0.24 -0.46 0.24 -0.48 0.23 LOSSt-1 0.45 0.11 0.45 0.13 0.44 0.12 0.45 0.10
STD_CFOt 1.28* 0.09 1.32* 0.08 1.24* 0.09 1.23* 0.09 HERFt-1 -0.21 0.96 -0.17 0.97 -0.48 0.91 -0.32. 0.94
INTERCEPT -7.38*** 0.00 -7.17*** 0.00 -6.95*** 0.00 -7.07*** 0.00
N 13,267 13,267 13,267 13,267
Pseudo R-sq 0.15 0.14 0.14 0.14
Area under ROC Curve 0.82 0.82 0.83 0.83 This table summarizes the results of logistic regressions of probability of accounting misstatement in a particular year on historical partner
reputation for misstatements. Sample period is 1995-2010 Two-tailed p-values are based on cluster-robust standard errors (clustered by audit firm).
*, **, *** denote significance of 0.1, 0.05, and 0.01 level, respectively. See the Appendix for variable definitions.
39
Table 5
The Effect of Audit Partner Reputation on Audit Partner Market Share
Panel A: General Relation
(1) (2)
DEPVAR Ch_Mks_Assett Ch_Mks_Salet
Coef. p-value Coef. p-value
Ch_MKS_Firmt 0.002 (0.19) 0.00 (0.30)
RESTATEt -0.003*** (0.00) -0.002*** (0.00) PARTNER INDEXPt -0.00*** (0.04) -0.00 0.14
PARTNER EXPt -0.00 (0.53) -0.00 0.70
PARTNER EXPERTt 0.04*** (0.00) 0.02*** 0.00
FIRM EXPERTt 0.00 (0.45) 0.00 0.13
INTERCEPT 0.00 (0.85) 0.00 0.36
Year fixed effects Yes Yes
N 3,539 3,539
R-sq 0.18 0.13
This table summarizes the results from regressing changes in audit partner market share in year t (based on the value of assets audited and the value of sales audited) on presence of a current period restatement. Two-tailed p-values are based on cluster-robust standard errors (clustered by audit firm). *, **, *** denote significance of 0.1, 0.05, and 0.01 level, respectively. See the Appendix for variable definitions.
40
Panel B: The effects of partner experience
(1) (2)
DEPVAR Ch_Mks_Assett Ch_Mks_Salet
Coef. p-value Coef. p-value
Ch_MKS_Firmt 0.002 0.22 0.00 0.85
RESTATEt 0.00 0.98 -0.00 0.97
RESTATEt*LONG EXP -0.006* 0.10 -0.004 0.23
LONG EXP -0.00 0.18 -0.00 0.84
PARTNER INDEXPt -0.00* 0.04 -0.00** 0.05 PARTNER EXPERTt 0.04*** 0.00 0.02*** 0.00
FIRM EXPERTt 0.00 0.51 0.00 0.14
INTERCEPT 0.00 0.93 0.00 0.74
Year fixed effects Yes Yes
N 3,539 3,539
R-sq 0.18 0.13
This table summarizes the results from regressing changes in audit partner market share (based on the value of assets audited and the value of sales audited) on presence of restatement in the current period. Two-tailed p-values are based on cluster-robust standard errors (clustered by audit firm). *, **, *** denote significance of 0.1, 0.05, and 0.01 level, respectively. See the Appendix for variable definitions.
41
Panel C: The effects of partner industry experience
(1) (2)
DEPVAR Ch_Mks_Assett Ch_Mks_Salet
Coef. p-value Coef. p-value
Ch_MKS_Firmt 0.002 0.17 0.00 0.80
RESTATEt -0.001 0.18 -0.00 0.52 RESTATEt*LONG IND EXP -0.004*** 0.00 -0.004*** 0.01
LONG IND EXP -0.00 0.21 -0.00 0.68
PARTNER EXPt -0.00** 0.04 -0.00*** 0.00 PARTNER EXPERTt 0.04*** 0.00 0.02*** 0.00
FIRM EXPERTt 0.00 0.66 0.00 0.15
INTERCEPT 0.00 0.93 0.00 0.82
Year fixed effects Yes Yes
N 3,539 3,539
R-sq 0.18 0.13
This table summarizes the results from regressing changes in audit partner market share (based on the value of assets audited and the value of sales audited) on presence of restatement in the current period. Two-tailed p-values are based on cluster-robust standard errors (clustered by audit firm). *, **, *** denote significance of 0.1, 0.05, and 0.01 level, respectively. See the Appendix for variable definitions.
42
Panel D: The effects of partner tenure
(1) (2)
DEPVAR Ch_Mks_Assett Ch_Mks_Salet
Coef. p-value Coef. p-value
Ch_MKS_Firmt 0.002 0.21 0.00 0.82
RESTATEt-1 -0.003*** 0.00 -0.002*** 0.01 RESTATE*LONG TENURE -0.00 0.94 -0.001 0.57
LONG TENURE 0.00** 0.05 0.001*** 0.00
PARTNER EXPt -0.00 0.56 -0.00 0.77
PARTNER INDEXPt -0.00** 0.02 -0.00* 0.07 PARTNER EXPERTt 0.04*** 0.00 0.02*** 0.00
FIRM EXPERTt 0.00 0.45 0.00 0.13
INTERCEPT 0.00 0.51 0.00 0.83
Year fixed effects Yes Yes
N 3,539 3,539
R-sq 0.18 0.13
This table summarizes the results from regressing changes in audit partner market share (based on the value of assets audited and the value of sales audited) on presence of restatement in the prior period. Two-tailed p-values are based on cluster-robust standard errors (clustered by audit firm). *, **, *** denote
significance of 0.1, 0.05, and 0.01 level, respectively. See the Appendix for variable definitions.
43
Panel E: The effects of partner experience, industry experience, and tenure combined
(1) (2)
DEPVAR Ch_Mks_Assett Ch_Mks_Salet
Coef. p-value Coef. p-value
Ch_MKS_Firmt 0.002 0.24 0.00 0.89
RESTATEt- -0.00 0.87 0.00 0.87
RESTATEt*LONG EXPt -0.005 0.22 -0.002 0.44 RESTATEt*LONG INDEXPt -0.002 0.22 -0.003*** 0.00 RESTATEt*LONG TENUREt 0.00 0.54 0.00 0.93
LONG TENUREt 0.00* 0.08 0.001*** 0.00
LONG EXPt -0.001* 0.05 -0.00 0.19
LONG INDEXPt -0.001 0.11 -0.00 0.20
PARTNER EXPERTt 0.04*** 0.00 0.02*** 0.00
FIRM EXPERTt 0.00 0.51 0.00 0.14
INTERCEPT -0.00 0.31 -0.00 0.04
Year fixed effects Yes Yes
N 3,539 3,539
R-sq 0.18 0.13
This table summarizes the results from regressing changes in audit partner market share (based on the value of assets audited and the value of sales audited) on presence of restatement in the current period. Two-tailed p-values are based on cluster-robust standard errors (clustered by audit firm). *, **, *** denote significance of 0.1, 0.05, and 0.01 level, respectively. See the Appendix for variable definitions.
本人參加於日本神戶舉辦的 2013 年第七屆 Asia Pacific Interdisciplinary Research in Accounting Conference (APIRA)會議。並發表論文 Does an Auditor’s Within-Industry Market Share Still Capture Auditor Industry Expertise in a
Mandatory Audit Partner Rotation Regime。
會議中獲得許多正面評價並取得寶貴的建議。在進行必要的修改與額外的分 析後，本文投稿至 Journal of Modern Accounting and Auditing。再經過二輪的修改，
該文已經被正式接受。於此一併感謝國科會的財務資助。
本人參加於美國安納罕舉辦的美國會計學年會並發表論文 The
Informativeness of Audit Partner Reputation: Evidence from Client Restatements in Taiwan.。主持教授為 Denise R. Hanes。會議中獲得許多正面評價並取得寶貴的 建議。該篇論文目前仍在繼續修改中。由於評價相當不錯，該文預計將投稿至頂 級的國際期刊。於此一併感謝國科會的財務補助。