Masoud Azizkhani

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Masoud Azizkhani

Head of Discipline Accounting and Corporate Governance

Sandy Bay Campus

How the length of the auditor–client relationship affects audit quality

Auditing the auditors.

When an auditor is first appointed to a company, they encounter a steep learning curve as they seek to understand the business and its environment. Over time, this becomes easier, as the auditor gains knowledge about their clients.

But over the long term, does this auditor–client relationship start eroding the independence of the auditor, and therefore the quality of the audit?

Dr Masoud Azizkhani, a researcher and a senior lecturer at the Tasmanian School of Business and Economics, has studied this question for more than a decade, beginning with his PhD in the early 2000s.

“At that time, it was a really hot topic, and it still is,” he says. “Many people were speculating about auditors’ independence – is it right for auditors to be connected to their client for a long time? How does the market perceive that? Is it a good or a bad thing?”

Dr Azizkhani has published a number of papers on the subject, both in Australia and overseas, and they show that beyond a ‘tipping point’ of about seven years, a long-term auditor–client relationship can impact negatively on the market perception of that company.

“Results show that longer partner tenure is associated with a higher cost of equity capital,” he says.

This policy has had an impact on business, as Dr Azizkhani’s work has shown that mandatory rotation of audit partners affects audit costs, and this is passed on to audit clients in the form of higher audit fees.

“Big audit firms can absorb the additional cost, but small accounting firms can’t, so it’s passed on to the client,” he says.

Dr Azizkhani is now focussed on this policy internationally. In 2014, the European Union introduced a 10-year mandatory audit firm rotation policy, and in his former country Iran, a company needs to change its audit firm every four years.

“That four-year period is quiet short,” Dr Azizkhani remarks.

“Our research shows that when there are other fundamental problems in the audit market, the rotation policy is not going to work. For example, when the demand for a high-quality audit is weak, mandatory audit firm rotation isn’t going to change that. And when competition in the audit market is mainly based on audit fees, rotation isn’t going to fix the audit quality issue.”

Dr Azizkhani joined the University of Tasmania in 2018, and obtained his PhD at the Australian National University (ANU) in Canberra.

Because of the globalisation of information that is now available, he says he’s well-placed to be conducting research with an international focus.

“As long as I have access to the major databases, it doesn’t matter whether I’m conducting my research in Sydney or Hobart,” he says.

Research that makes a difference

View more on Mr Masoud Azizkhani in WARP

Fields of Research

  • Accounting, Auditing and Accountability (150199)
  • Auditing and Accountability (150102)

Research Objectives

  • Administration and Business Support Services (900201)


Total publications


Journal Article

(3 outputs)
2018Azizkhani M, Daghani R, Shailer G, 'Audit firm tenure and audit quality in a constrained market', The International Journal of Accounting, 53, (3) pp. 167-182. ISSN 0020-7063 (2018) [Refereed Article]

DOI: 10.1016/j.intacc.2018.07.002 [eCite] [Details]

Citations: Scopus - 1Web of Science - 1


2013Azizkhani M, Monroe GS, Shailer G, 'Audit partner tenure and cost of equity capital', Auditing, 32, (1) pp. 183-202. ISSN 0278-0380 (2013) [Refereed Article]

DOI: 10.2308/ajpt-50308 [eCite] [Details]

Citations: Scopus - 17Web of Science - 16


2010Azizkhani M, Monroe GS, Shailer G, 'The value of Big 4 audits in Australia', Accounting and Finance, 50, (4) pp. 743-766. ISSN 1467-629X (2010) [Refereed Article]

DOI: 10.1111/j.1467-629X.2010.00346.x [eCite] [Details]

Citations: Scopus - 14Web of Science - 9


Grants & Funding

Funding Summary

Number of grants


Total funding



A summary of the project proposal including the category of grant involved, the project title, the project summary, and research methods. (2018)$5,000
The project intends to examine the impacts of audit committee chairs characteristics (specifically, gender, financial expertise, tenure, industry experience and remuneration) on (a) auditor choice, (b) audit fees, and (c) audit quality.
Accounting & Finance Association of Australia and New Zealand Ltd ($5,000)
Administered By
University of Tasmania
Research Team
Azizkhani M; Hossain S

Research Supervision




PhDThe Relationship between CSR Disclosure Guidelines and the Implementation of these Guidelines in a Developed and Developing Country2018