The Study of Auditor Tenure on Earnings Quality Attributes in the firms listed in the Tehran Stock Exchange

Document Type : Original Article

Authors
Mohammad Khalilzadeh 1
Yunes Badavar Nahandi 2
Zahra Dianati Deylami 3
1 Master student in ACC. At Science & Research Branch, Islamic Azad University
2 Department of Accounting, Tabriz Branch, Islamic Azad University
3 Department of Accounting, University of Economic sciences
Abstract
In this study, we have documented evidence effect of auditor tenure on earnings quality (conservatism, value relevance, and persistence). The main motivation for this study had been concerns that longer auditor tenure reduces earnings quality. The purpose of this study is to determine whether length of a given auditor-client relationship affect on earnings quality information or not. To test the research hypotheses we have selected 72 companies in Tehran Stock Exchange during the period 2006-2012. In this research Givoly &Hayn (2007) model has been used for measurement of earnings conservatism. In this research it has been used past four periods financial information in order to reduce measurement error of auditor tenure variable, and also value relevance and reliability of earnings for each year, has been estimated by time series regression for five years periods. Using regression analysis, results indicated no significant effect of auditor tenure on earnings quality. Thus, mandatory auditor rotation policy is not effective to improve the quality of earnings.
Keywords
Auditor Tenure
Earnings Quality
Conservatism
Value Relevance
Reliability