Breaking the Boilerplate? : A quantitative study on the relationship between audit partner tenure and boilerplate language in CAM disclosures

Audit reports are a cornerstone of financial transparency and trust in capital markets, and recent regulatory reforms have aimed to enhance their informativeness. One such reform is the introduction of Critical Audit Matters (CAMs) by the Public Company Accounting Oversight Board (PCAOB under AS 3101, requiring auditors to disclose areas of significant complexity or judgment in their audit process. However, concerns have emerged regarding the use of standardized, boilerplate language in CAM disclosures, which may undermine the intended transparency and relevance of the information. Simultaneously, long-standing auditor-client relationships, particularly at the individual partner level, raise questions about independence and the effectiveness of audit communications. This thesis investigates the intersection of these two issues by examining the relationship between audit partner tenure and the use of boilerplate language in CAM disclosures. It aims to answer the following research question: Does longer audit partner tenure lead to boilerplate in the disclosure of Critical Audit Matters (CAMs)? Through a quantitative research design grounded in agency theory, institutional isomorphism, and stakeholder theory, this study analyses audit reports from U.S.-listed large, accelerated filers (LAFs) audited by Big Four firms between 2019 and 2023. Using textual similarity analysis and regression modelling, the study evaluates whether increased tenure correlates with more standardized CAM language, potentially indicating reduced audit transparency. The research focuses on non-financial firms listed on the NYSE or NASDAQ and includes controls to account for client complexity and auditor continuity at the firm level. The findings provide insights into how auditor familiarity over time may affect the degree of disclosure customization in CAMs. This thesis highlights the potential risk that prolonged engagement at the partner level leads to less informative reporting, in contrast with regulatory goals aimed at enhancing disclosure quality. In doing so, the study contributes to the literature on audit quality by shifting focus from firm-level to partner-level dynamics in the audit-client relationship and emphasizing the communicative role of CAMs in financial reporting. The results also hold practical implications. For audit practitioners, the study underscores the need for ongoing critical reflection on disclosure practices, particularly in long-term engagements. For regulators such as the PCAOB and SEC, the research offers evidence relevant to evaluating current tenure rules and CAM guidelines. For investors, it provides a framework for better assessing the informativeness of CAMs as a signal of auditor independence and engagement quality. In conclusion, this thesis bridges the gap between theories of auditor behavior and empirical analysis of CAM content. It contributes to a deeper understanding of how individual auditor characteristics, particularly tenure, influence the quality of audit disclosurges. The study recommends further attention to partner-level rotation and disclosure practices as mechanisms to counteract the unintended consequences of prolonged auditor-client familiarity.