The Impact of Partner Characteristics on Audit Quality for Norwegian Private Companies

Abstract

This study investigates how audit quality is influenced by various characteristics of the engagement partner, using the propensity to issue a going concern opinion (GCO) as a proxy to measure audit quality. Using a sample of 1,115 Norwegian private limited companies that went bankrupt in the period from 2018 to 2022, we find that partner age has a non-linear relationship with audit quality, with the youngest and oldest partners providing higher audit quality than those in between. Second, we do not find evidence for significant relationships between partners’ firm affiliation, gender or experience and audit quality. Third, we find that the COVID-19 pandemic in 2020 has had a positive effect on audit quality. This may be due to audit firms implementing measures to mitigate the increased risk brought by the pandemic, government support schemes resulting in fewer bankruptcies, and a more cautious approach to the going concern assessment. Finally, we find that the effect of gender and office location on audit quality vary for Big-5 and non-Big-5 partners. This study contributes with additional insight into which characteristics may influence audit quality in the private segment and implications for future research.