سینا اثنی عشری

Abstract

To issue a high quality audit report, auditors need to get acquainted with their clients' activities in auditing process, and gather a large amount of information around subjects such as methods and procedures used in measuring and recording financial transactions, internal controls and related risks, plans the company use to deal and neutralize those risks, investment plans, and etc. The more knowledge auditors gain, especially in a specific industry, the more experienced they can get; granting them a higher quality audit reports. Thus, it seems companies performing in a same industry are more interested in sharing the same auditors. However, in this article, we focus on the negative side of sharing the same auditor. We assume that the accumulation of information in auditors, increases the chance of information spillover among the firms sharing the same audit partners and firms. Since many of the information gained by auditors can bring a competitive advantage to the clients, are concerned clients about the information spillover still willing to share partners with other companies working in the same industry? Since the audit partners of a specific project are more engaged with the information related to that audit work rather the other partners, we consider partners as the focal point of information accumulated through auditing procedures, and investigate whether client's concern about information spillover can prevent companies from sharing the same audit partners. Prior literatures have also considered audit office as an information channel through the companies. Thus, we also investigate the effect of firms' concern about information spillover on choosing the same audit firms. To perform the research, we construct company-pairs in a specific industry and each company-pair would be treated as an observation. To perform the pairing, we consider every possible combination of two companies working in the same industry. For example, in an industry with ۵ companies, there would be ۱۰ possible pairing; granting us with ۱۰ observations. Our sample consists of companies working in following industries of "Tehran Security Exchange Market": "Cement", "Chemical products", "Metal products", "Electric machines", "Tile and Ceramic", "Tra  ortation", "Computer and related activities" and "Information and Communication". Pairing companies in the named industries, constructs a sample of ۵۵۰ company-pair which is gathered in ۵ years including ۱۳۹۶-۱۴۰۰ (۲۷۵۰ Obs.). We measured "Concern" as the independent variable using four proxies labeled as "R&D Expenditures", "New Product", "Inovation", and "Intangible Raise", plus a fifth proxy labeled as "Concern Intensity" to aggregate the results of four previous ones. The results indicate that the firms' concern about information spillover does not significantly affect choosing the same audit partners, but it has a negative significant effect on choosing the same audit firm.