主题：Does Mandatory Audit Partner Rotation Improve Audit Quality? Evidence from Arm-length vs. Non-arm-length
摘要：Whether auditor rotation can improve audit quality is a focus of accounting and auditing research. This study considers the effect of previous and new audit partners’ former auditing team working relationships on the effectiveness of auditor rotation. Using a sample of Chinese firms undergoing auditor partner rotation, we find that the previous audit partners are more likely to rotate back after the cooling-off period if former auditing team working relationships exists between previous and new audit partners (non-arm-length rotation). After rotation, if no former auditing team working relationship (arm-length rotation) exists between the previous and new partners, the audit quality improves; however, if the rotation is non-arm-length, the audit quality improvement is significantly reduced and in some cases diminishes completely. The policy implication of this study implies that previous audit partners may use new transitive audit partners to evade mandatory audit partner rotation, causing the desired objective of the regulators to fail.