Auditor University Education: Does it Matter?

Abstract

We examine the implications of auditor education for audit quality and audit pricing. We exploit a novel institutional setting in the UK, where auditors major in many different degrees at university and signing auditors are identifiable. Using hand-collected data for a large sample of signing auditors, we establish two main findings. First, auditors whose degrees have a quantitative orientation are associated with higher accruals quality and higher audit fees than those with more qualitative degrees. Second, auditors with degrees directly relevant to accounting are also associated with higher accruals quality and increased audit fees relative to auditors with unrelated university degrees in qualitative subjects. Overall, our study provides evidence that heterogeneity in auditor education is associated with divergent audit outcomes.