The Effect of the Auditors' Rotation on the Accounting Quality in the Case of Romanian Listed Companies under the Transition to IFRS
In assuring the quality of the financial information issued by the listed companies, the role of the financial auditor is to express his own opinion regarding the compliance of the financial statements with a financial reporting framework. In order for this opinion to be a reliable one, the auditor has to develop it considering the specific requirements of competence, ethic judgment and professional ethics. Meeting these requirements supposes significant efforts from the auditors, and also from the professional organization they are affiliated to, as well as the audited companies. We appreciate that the financial auditors' financial independence and objectivity are also assured by their periodical rotation. The scope of this study is to analyze and evaluate the influence of the auditor's rotation on the information value relevance from the individual financial statements and from the consolidated statements that make the subject of financial auditing. The study was carried out on a number of 64 Romanian companies, listed on the Bucharest Stock Exchange, between 2006 and 2014. The research objectives considered the estimation of the auditor's rotation influence on the value relevance of the reported information of the Romanian BSE listed companies. The results of the study show the fact that the auditor's rotation significantly contributes to the change of the value relevance degree.