Audit Staff Satisfaction and Audit Quality: Evidence from the Private Client Market Segment

Abstract

This study investigates the relationship between audit staff satisfaction (measured by crowd-sourced employer reviews) and audit quality in the private client setting. In this setting, extrinsic incentives to provide high quality audits–such as regulatory enforcement, reputational pressure, and litigation costs–are less pronounced than for listed client audits. We find audit staff satisfaction, an important intrinsic motivational factor, is positively and significantly associated with audit quality in the private client setting. Consistent with prior research, we find no significant association between staff satisfaction and audit quality for listed clients. The significant association in the private client setting primarily applies to non-Big 4 firms, for which extrinsic factors play a less influential role than for Big 4 firms. Moreover, we show staff satisfaction moderates possible negative effects of conditions, such as the provision of non-audit services and longer audit tenure, which may pressure auditors to compromise audit quality. Overall, these findings provide new insights about the influence of audit input factors on audit quality.