The effect of auditor tenure, mandatory auditor rotation on audit quality

e and insignificant impact of audit firm and size on discretionary accruals, which means audit firm and size are positively associated with audit quality. The findings of last researches on these relationships are mixed. It is 607 known that Big4 have a good reputation on audit service. However, Monroe and Hossain (2013) concluded that there are no strong evidences that shows Big4’s clients have a higher audit quality. It might be because nowadays, audit services are being improved thanks to the appearance of many good audit firms, and during collecting auditor information, it is revealed that the portion of the Big 4 audit firm is not very high. Furthermore, both of LEV (Leverage) and ROA are found to have positive and significant effect on discretionary accruals and hence, negative and significant effect on audit quality. This means when a company’s leverage and ROA is higher, discretionary accruals also high, which can be understood as poorer audit quality. 5. Conclusion and Discussion In conclusion, this research is a quantitative method research studying the relationship between auditor tenure and audit quality. At the same time, it also examines the association between regulatory environment and audit quality. The result shows that the audit tenure has positive and significant relationship with audit quality, meaning too long tenure will harm audit quality. It is, hence, necessary to maintain mandatory auditor rotation policy to avoid the negative impact of long tenure on audit independent and quality. In addition, the research also reveals a strong impact of leverage and profitability on audit quality. Beside the significance of its findings, the research also has its own limitations. Firstly, the research is designed to use quantitative method as the researcher adopts the positivist stance of philosophy. However, quantitative method and deduction approach as natural science might be considered to be more rigid and inflexible when understanding cause – effect link, which is supposed to be affected by many variables including human interpretation and understanding (Saunders, Lewis, 2012). In this way, mixed method can be more effective than using solely one method. The second drawback of this research is the proxy of measuring variables. There are different ways to measure one variable. For example, beside discretionary accruals, audit quality can also be assessed by the degree of compliance with relevant accounting standards or the likelihood of breach detection. Profitability can be measured either by the ratio of profit after tax to total asset (ROA) or by the ratio of profit after tax to total equity. Hence, it is hard to choose a proxy which can be complete substitute for one variable. 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