Effect of Auditor Foreign Experience on Audit Quality: Evidence From Jordan

Abstract

This paper investigates the effects of auditors with foreign experience from advanced markets on audit quality in Jordanian. Since 2017 thousands of Jordanian professional workers returned from Saudi Arabia after Saudi’s localization policy in 2016. The auditors may have extensive experience in dealing with complex transactions, exchanging knowledge, and advanced technology while working in Saudi Arabia. However, evidence is scarce on whether auditors with foreign experience from Saudi Arabia could enhance audit quality in the Jordanian audit market. Earnings management via discretionary accrual was employed to proxy audit quality. A panel data analysis fixed effect model was employed to examine the impact of auditor foreign experience on discretionary accrual using a sample of 98 Jordanian listed companies with a total observation of 686, during the Arab spring period from 2013 to 2019. The results suggested that an audit team with foreign experience reduces earnings management activities, which implies enhancing audit quality. This research raises probable implications for policymakers in Jordan to consider how to improve audit quality by benefiting from foreign audit experience.