This study provides evidence on how local office growth affects audit quality. We predict that significant recent growth will temporarily stress office resources, leading to a negative relation between office‐level growth and audit quality. To test this prediction, we examine a sample of 17,062 firm‐year observations from 2005 to 2010. Results indicate a consistent negative relation between changes in volume of audit work and audit quality. Specifically, clients of offices that experience increases in workload over the prior year have greater absolute discretionary accruals as well as an increased likelihood of restatement. Our tests also indicate that the effect of office growth is transient and vanishes after one year. We find limited evidence that the size of the auditor's national network of offices partially mitigates the negative effects of office growth on audit quality. We further show that proxies for audit quality are negatively related to office‐level growth from new and existing clients. These findings are robust to controls for client and auditor characteristics as well as alternative specifications of growth. Taken together, evidence indicates that while larger offices provide higher audit quality, the benefits of office size are not realized immediately and rapid growth temporarily impairs audit quality. These results are informative to regulators concerned with audit quality and to practitioners charged with adjusting to office growth.

The “coopetition” paradox exists when two or more organizations are simultaneously involved in cooperative and competitive interactions. In the accounting industry, small firms encounter coopetition when they align themselves with other independent firms to form accounting associations and networks (AANs). AANs are a type of interorganizational relationship (IOR) that provide opportunities for member firms to collaborate by sharing important resources such as expertise, best practices, and manpower. However, member firms also compete in the marketplace for clients and human capital, which incentivizes uncooperative and opportunistic behavior. If managed inadequately, coopetitive tensions can significantly hamper AAN benefits and may lead to IOR failure. Given the considerable longevity of AANs, we interview 42 high‐level accounting professionals to understand AANs' apparent successful management of these tensions. Leveraging coopetition and IOR theory, our analysis suggests that transactional mechanisms (contractual agreements, organizational structure, selection/monitoring processes) and relational mechanisms (trust, social ties, reciprocity) play key roles in encouraging healthy cooperation and competition among member firms. One of our main conclusions is that these mechanisms contribute to AAN success because they are leveraged comprehensively across each IOR life cycle phase, and they are mutually reinforcing, with transactional mechanisms providing the foundation to inspire confidence and encourage the development of relational mechanisms. Our research enriches existing accounting and coopetition literature, provides a new perspective for AANs, and responds to calls to understand key factors of IOR success.