Review of Accounting Studies

, Volume 23, Issue 3, pp 1096–1136 | Cite as

Audit personnel salaries and audit quality

  • Jeffrey L. HoopesEmail author
  • Kenneth J. Merkley
  • Joseph Pacelli
  • Joseph H. Schroeder


This study examines the relation between audit personnel salaries and office-level audit quality. We measure audit personnel salaries at the associate, senior, and manager ranks for Big 4 audit offices from 2004 to 2013, using unique individual-auditor-level data obtained from the U.S. Department of Labor. We find that offices that pay lower salaries have a higher percentage of clients that experience restatements. In related analyses, we also find lower levels of audit quality when audit employees are paid less, relative to other lines of service in accounting firms. Finally, we document positive and significant associations between salary and fees, suggesting that audit offices pass some of the cost of higher labor onto their clients. Overall, our findings provide important initial evidence on the role of audit salary and its relation to audit quality and audit fees.


Audit personnel salary Audit quality Salary determinants Audit fees 

JEL classification

M41 M42 M51 M52 



We appreciate helpful comments from Russell Lundholm (editor), an anonymous reviewer, Andrew Acito, Daniel Aobdia, Mary Barth, Scott Bronson, John Donovan, Josh Gunn, Chris Hogan, Patrick Hopkins, Andrew Imdieke, Harold Kazanabon, W. Robert Knechel, Bill Kinney, Mihir Mehta, Miguel Minutti-Meza, Jessie Watkins, and workshop participants at the University of Michigan, Idaho State University, the 2016 Indiana University Accounting Leading Scholars Symposium, the 2016 Illinois Audit Symposium, the 2017 International Symposium on Audit Research (Sydney), the 2017 Midwest Accounting Research Conference (UW-Madison), the 2018 AAA Audit Midyear Meeting (Portland), and the 2018 AAA FAR Midyear Meeting (Austin). We also express gratitude to the three anonymous Universities that provided us with undergraduate placement and salary data. Finally, we thank Kevin Hoopes  for information regarding the H-1B visa data.


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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2018

Authors and Affiliations

  1. 1.University of North Carolina at Chapel HillChapel HillUSA
  2. 2.Indiana UniversityBloomingtonUSA

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