Auditor rotation and auditor independence: An investigation using social identity theory and accountability

The AICPA and GAO claim that audit partner rotation provides substantially the same benefits (independence) as audit firm rotation. Meanwhile, the PCAOB has solicited comments on a potential regulation requiring the lead engagement partner's personal signature to appear on the publicly disclosed audit report. In this experiment-based dissertation, I use Social Identity Theory to make predictions regarding auditors' independence levels in partner and firm rotation scenarios. I also investigate accountability's effect on auditors' decisions, including how accountability interacts with identification. The results suggest identification interacts with accountability in affecting auditors' decision making and that auditors may make different decisions under partner and firm rotation. These results are informative to the PCAOB and practitioners in discussing the current issues of firm rotation and partner signing.;KEYWORDS: audit partner rotation, auditor independence, mandatory rotation, accountability, Social Identity Theory.