Partner wealth and audit quality: evidence from the United States

John Xuefeng Jiang, Shaohua He, K. Philip Wang

Review of Accounting Studies · 2025 · Volume 30 · Issue 1

Abstract

Using the market values of audit partners’ houses as a measure of their personal wealth, we find that wealthier U.S. partners provide higher-quality audits, as evidenced by fewer material restatements, fewer material SEC comment letters, and higher audit fees. A battery of falsification tests shows that these findings are not driven by the matching of wealthier partners with clients with higher financial reporting quality. Our additional analyses suggest two explanations: greater personal wealth both incentivizes partners to exert more effort in delivering high-quality audits and reveals partners’ audit competence.

Keywords

Individual partner, Personal wealth, House value, Audit quality

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