Topic:Audit Risk Management: Evidence from Assignment of Field Engagement Managers
Speaker:Yuan Zhang，University of Texas at Dallas, USA
Time:Friday, April 12th, 10:00-11:30 a.m
Place:Room 217, Guanghua Building 2
We examine audit firms’ risk management through the matching between new clients and field engagement managers. We find that more experienced engagement managers are assigned to new clients with higher audit risk; however, this risk-control motivated matching is only observed at the audit group level, not at the audit firm level, underscoring the importance of understanding the operational structure of audit firms. The risk-control motivated matching is stronger if the audit firm or any partner in the firm was previously subject to regulatory sanctions. Further analyses also show that more experienced engagement managers indeed provide higher quality audit service, as evidenced by higher likelihood of issuing qualified opinions. Our paper provides important large sample evidence of audit firms’ risk management in the field engagement process.
Dr. Yuan Zhang is an associate professor of accounting at the University of Texas at Dallas, and is currently visiting Peking University and Tsinghua University. She received her bachelor degree from Tsinghua University and doctorate degree from University of Southern California. Dr. Zhang’s research primarily focuses on financial reporting and disclosure, securities regulation, and corporate governance. Her research has been published in top journals such as The Accounting Review, Journal of Accounting & Economics, Journal of Accounting Research, and Management Science, and has been featured in business press including Wall Street Journal, The Economist, and Bloomberg, among others. Dr. Zhang previously worked at Columbia University and won the Teaching Award in the MBA program. Dr. Zhang enjoys travel and photography in her spare time.
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