Client Relationship-Building and Audit Quality

Posted: 18 Aug 2017 Last revised: 16 Oct 2021

See all articles by Joshua Ronen

Joshua Ronen

New York University (NYU) - Department of Accounting

Minlei Ye

University of Toronto

Date Written: Feburary 20, 2019


This paper presents a model of auditor-client relationship-building. Existing literature suggests that quasi-rents rising from long auditor tenure have a negative effect on auditor independence. In contrast to this conventional wisdom, our paper shows a positive effect of quasi-rents resulting from relationship-building on auditor independence. Prohibiting relationship-building takes away this benefit, and increases the likelihood of an auditor accepting an inaccurate, higher report. This is the first study analyzing the impact of client relationship-building initiated by auditors on audit quality.

Keywords: auditor independence; client relationship building; audit evidence precision; audit quality

JEL Classification: M42; M48

Suggested Citation

Ronen, Joshua and Ye, Minlei, Client Relationship-Building and Audit Quality (Feburary 20, 2019). 2018 Canadian Academic Accounting Association (CAAA) Annual Conference, Available at SSRN: or

Joshua Ronen

New York University (NYU) - Department of Accounting ( email )

40 West 4th Street, Suite 400
Suite 10-180
New York, NY 10012-1118
United States
212-998-4144 (Phone)
212-995-4599 (Fax)


Minlei Ye (Contact Author)

University of Toronto ( email )

Toronto, Ontario M5S 3G8

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