In the paper, we exploit a novel dataset of online job postings to examine the skills that accounting firms are demanding from their auditors, and whether these skills relate to audit quality. We document substantial variation in the demand for auditors’ cognitive and social skills both across and within accounting firms, suggesting that audit offices are not homogeneous in their demand for such skills. We find that the demand for auditors’ cognitive and social skills increased over our sample period of 2010-2019 and is positively associated with audit quality. This association is stronger for audit engagements that are more complex or require greater coordination, suggesting that cognitive and social skills are particularly important in engagements where effective communication and knowledge transfer, as well as sound professional judgment and skepticism, are needed. The association is also stronger for audit offices with greater investments in new technology, consistent with the complementary relation between cognitive and social skills and the use of technology.
*This research was featured in Smith Brain Trust: Will Robots Replace Accounting Jobs?
Chad Ham (Smith PhD grad now at Kelley School of Business, Indiana University); Rebecca N. Hann (Robert H. Smith School of Business, University of Maryland); MaryJane Rabier (Smith PhD grad now at Olin Business School, Washington University in St. Louis); Wenfeng Wang (Smith PhD grad now at Southern University of Science and Technology)