Key words: audit quality, group audit, auditing standards, public oversight, litigation, regulation

“Context matters: Essays on factors affecting the supply of audit quality and audit outcomes”

Audit quality is of importance for the functioning of capital markets. This dissertation examines topics that are of concern to the audit profession, regulators, standard-setters, and the public at large. Just recently (January 14, 2020), the Dutch Monitoring Commissie Accountancy has published their final report ‘Spiegel voor der accountancysector’ in which it suggests measures to improve audit quality. This dissertation sheds light on some issues that are raised in this report, such as the impact and organization of public oversight. Study 1 finds that in line with concerns of regulators and standard-setters, audit quality problems are prevalent in group audits involving component auditors, despite a standard-setting effort to address this concern. Study 2 demonstrates audit quality improvements after commencement of inspection by nation public oversight boards (such as the AFM) worldwide and that these improvements are driven by boards that disclose inspection results. Study 3 shows that two forms of regulatory risk and litigation risk jointly affect auditor behavior, and that both risks reinforce each other.