... provides evidence that audit offices offering higher compensation achieve more profitable performance, as reflected in increased market share, higher return on assets and greater operating profit margins. Mechanism tests suggest that reductions in auditor turnover, driven by compensation incentives...

... for the increased effort. In addition, when auditors are designated by regulators following the revelation of fraud, audit fees and premiums increase, but audit hours do not. Finally, auditor turnover becomes more frequent after the revelation of fraud. Overall, the findings suggest that auditors update...