The Impact of Engagement Quality Review Practices on Concurring Partner Objectivity

ABSTRACT Effective EQR is crucial to ensure audit quality. We conduct an experiment with a unique and experienced sample: 65 public company EQR partners. In contrast with the prior audit literature, we find that partners involved throughout the audit or who are subjected to a situation intended to increase conformity pressure are less likely to sign off on audits containing potentially material goodwill impairment issues, relative to EQR partners who are only involved at the end of an audit or who do not face additional pressure. We also describe the EQR process subsequent to changes in the regulatory environment and conduct exploratory analyses, which increase our understanding of how EQR is conducted in practice, factors important to EQR partners, and how EQR partner attributes moderate their responses to pressure. Our findings suggest that EQR partner involvement throughout the audit, along with several EQR partner attributes, can enhance audit quality. Data Availability: Contact the authors. JEL Classifications: M42; M48.