Effect of auditor rotation on independent audit quality: Evidence from Borsa Istanbul

Studies in the literature show that a definite judgment about the effect of rotation application on audit quality in independent audit has not been reached. While some of the studies conducted indicate that the rotation application has a positive effect on the quality of the audit, some of the studies indicate that the rotation application has a negative effect on the quality of the audit. The main argument of those who advocate rotation practice in the independent audit is to prevent the loss of independence due to the close relationship established between the auditor and the enterprise while the main argument of those who do not advocate rotation application is that the quality of the audit will decrease due to the lack of knowledge of the new auditor regarding the company. The aim of this study was to investigate the effect of the rotation application in Turkey on audit quality. In the study in which the independent auditor's modified opinion was used as the quality indicator in the independent audit, 138 enterprise data obtained from the companies operating in Borsa Istanbul were analyzed using the penalized logistic regression and logistic regression method in 2018. According to the research, it is concluded that mandatory and voluntary audit partner rotation improves the quality of independent audit in penalized logistic regression and logistic regression analysis. Keywords: Audit partner rotation, audit quality, penalized logistic regression, logistic regression