Audit partner rotations boost financial reporting quality, but firm rotations undermine it
The researchers looked at how changing auditors (auditor rotation) affects the quality of audits in companies listed on the Indonesia Stock Exchange. They found that switching audit partners often can improve audit quality as it brings in fresh perspectives. However, changing audit firms frequently can actually lower audit quality, possibly due to communication issues or fake rotations. The study recommends regulators to focus on improving audit partner rotations to boost audit quality and address the problems arising from audit firm rotations. This research emphasizes the importance of effective auditor rotations for better audit quality.