High-speed railways, audit partner changes across audit offices and audit quality: Evidence from China
研究中国高铁开通如何影响审计事务所跨分部调配审计合伙人，发现高铁缩短客户与事务所距离后，合伙人变更更可能发生，且能提升审计质量、减少财务错报和监管处罚，但不影响审计费用。
The development of high-speed railways (HSRs) has significant regional economic and social implications. We study a micro externality of such development, namely the impact of HSRs on audit firms' human resource allocation and audit quality. Specifically, we investigate the relationship between the availability of HSRs and audit partner changes across audit offices in China which involves a simultaneous change in audit partner and audit office to reallocate human resources. We find that the advent of HSRs between clients and audit offices increases the likelihood of audit partner changes across audit offices especially for predecessor audit offices with severe human resource constraints due partly to the mandatory auditor rotation requirement. Such audit partner changes across audit offices most likely are reciprocal over time, occur within the optimal HSR transportation interval and can significantly improve audit quality in terms of reducing excessive financing reporting discretions, misstatements and regulatory sanctions, but exert no effect on audit fees . Our study has implications for audit firms’ human resource management in light of infrastructure improvements and for audit policy makers to evaluate the standards for audit partner rotations.