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Abstract

This dissertation comprises three empirical chapters examining the economic and social influences on individual auditor behavior, with a focus on auditors’ labor market and work-related outcomes.

Chapter 1 investigates the role of social learning in shaping auditors’ professional decision-making and work-related outcomes. Exploiting Danish administrative data from 2016 to 2020 on individual auditors’ familial criminal histories and social backgrounds, we find that auditors who are exposed to parental financial crime convictions are more inclined to serve clients with more conservative financial reporting, indicating that exposed auditors adopt a more risk-averse client engagement strategy. We also find that exposed auditors deliver higher-quality audits compared to their counterparts without such exposure, suggesting that criminal exposure may heighten auditors’ awareness of non-compliance risks. These effects are more pronounced among auditors who experienced exposure during their early formative years, those whose parents faced more severe legal penalties, and those with repeated exposure to parental convictions. Together, these findings underscore that auditors’ social and moral learning from observed convictions and punishments can have lasting implications for their audit practices.

Chapter 2 examines the influence of auditors’ personal financial stress on their work-related outcomes. We provide evidence that indebted auditors take on a heavier workload by serving more clients and working longer hours, presumably to increase their earnings and manage debt services. The dynamic analysis reveals that, prior to incurring debt, auditors focus primarily on extending their working hours, whereas afterward, their focus shifts to expanding their client portfolios. In addition, we find a negative association between auditors’ personal indebtedness and audit quality. Our findings are robust to two identification strategies that exploit changes in regional housing prices and parental monetary transfers. This study contributes to the line of research examining the impact of individual auditors’ personal traits on audit outcomes.

Chapter 3 focuses on how auditors’ personal economic circumstances shape their labor market outcomes. We find that financially stressed auditors are more likely to switch audit firms in the following year. Their job moves are generally directed toward larger audit firms and are associated with an increase in their subsequent compensation. We also find that female auditors are less likely to change audit firms when constrained by debt stress. Furthermore, we show that financial stress increases auditors’ propensity to take on a secondary job outside their primary employment. These findings reveal that economic incentives hold broader implications for auditors’ career mobility and turnover.

Publication Type:	Thesis (Doctoral)
Subjects:	H Social Sciences > HF Commerce > HF5601 Accounting
Departments:	Bayes Business School > Bayes Business School Doctoral Theses Doctoral Theses

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