Auditor Commitment and Turnover Intentions Following Negative Inspection Findings: The Effects of Regulator Enforcement Style and Firm Response

What is it about?

We investigate, following the reporting of negative inspection findings, whether the regulators enforcement style and the firm's response to the negative findings impacts auditors' feelings of attachment and identification with the audit profession and their firm (commitment) and auditors' intention to seek employment in a different profession or in a different firm (turnover intentions). This is important in that it is necessary to broadly examine the impacts on audit quality of the regulatory inspection regime. We find that a critical enforcement style and a response that involves increasing the amount of prescription in audit processes have a detrimental effect on auditor commitment and turnover intentions. This is concerning as the loss of qualified auditors from the profession may attenuate some of the audit quality benefits attributed to inspection regimes.

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