Is Audit Partner Identification Useful? Evidence from the KPMG “Steal the Exam” Scandal
研究毕马威在丑闻中隐瞒涉事合伙人姓名后，市场能否通过合伙人离职信息识别风险，发现涉及潜在涉事合伙人的审计客户遭受了成本损失。
SUMMARY On April 11, 2017, the Securities and Exchange Commission charged KPMG with using confidential information relating to the Public Company Accounting Oversight Board’s planned inspections of KPMG. The incident was colloquially labeled the KPMG “steal the exam scandal.” We use this setting to investigate whether the market finds information concerning individual partner identity useful. Since KPMG withheld the names of the audit partners involved in the scandal, the market was unable to distinguish between rotation-induced audit partner turnover and regulatory-related audit partner terminations. Following information economics models of nondisclosure, we predict the market would use information about KPMG audit partner turnover as evidence of regulatory-related audit partner terminations and impose costs on KPMG audit clients who experienced audit partner turnover. The results are consistent with our prediction as KPMG’s overall reputation was not damaged, whereas audit engagements involving audit partners that were potentially involved in the scandal were. Data Availability: All data was obtained from publicly available sources. JEL Classifications: M42; M48.