You Can’t Get There from Here : The Influence of an Audit Partner’s Prior Non-Public Accounting Industry Experience on Audit Outcomes

We examine whether audit partners with prior non-public accounting industry experience conduct higher quality and more efficient audits. We further analyze whether the sequencing and nature of this experience matters by splitting audit partners with prior industry experience into those who started in industry and subsequently became an auditor (“industry starters”) and those who started in public accounting, left to take an industry position, and later returned to public accounting (“boomerangs”). Additionally, we separate these two groups according to whether the partner has experience in a key financial reporting oversight role. We find that boomerang auditors with experience in key financial reporting oversight roles are associated with higher quality and more efficient audits. These results suggest that the formative impact of auditing experience early in one's career coupled with actual first-hand experience in major oversight roles shapes the efficacy of audit partners' prior industry experience on audit quality and efficiency