Contemporary Accounting Research Vol. 41 No. 4 2024
Auditor distraction: The case of outside job opportunities for external auditors and audit quality
Abstract
Public accountants are in high demand by non‐accounting firms. While this demand attracts high‐quality accountants to public accounting, it can negatively impact audit quality by distracting auditors. We find that the number of metropolitan statistical area–level busy season job postings for public accountants by non‐accounting firms is positively associated with misstatements. Results are most pronounced (1) when outside job opportunities are from non–publicly traded companies, which likely provide better work‐life balance, and (2) when auditors are under a heavier workload, as captured by higher audit fee‐to‐auditor ratios and increased job postings by audit offices leading into the busy season. Results also suggest that accounting firms that provide large pay increases before the busy season can mitigate the negative audit‐quality effects of busy season job postings for public accountants. These results suggest that accounting firms are not immune to negative effects of auditor distraction from outside job opportunities despite accounting firms knowing that their auditors are highly sought after by non‐accounting firms.
- DOI
- 10.1111/1911-3846.12994
- Volume
- 41
- Issue
- 4
- Pages
- 2546-2573
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref