Effect of Mandatory Rotation on Independent Audit Quality: Literature Review

After the financial scandals experienced in the world, mandatory rotation application in an independent audit that was offered by SOX Rule in 2002 has been subjected to several academic studies (theoretical and empirical) to provide confidence and auditor independence. The studies mentioned analyzed the effect of the mandatory rotation on the audit quality in different country samples under different rotation conditions at different levels by different variables. The purpose of this research was to make a summary of the studies in the literature about the mandatory rotation. In accordance with this purpose, 41 academic studies were reviewed in terms of their findings about the effect of the mandatory rotation on the independent audit quality by classifying these studies with regards to their implementation level. It is concluded at the end of the evaluations that literature has several different results on many subjects, notably costs and tenure and the level in which the mandatory rotation needs to be applied. Moreover, with reference to the literature, there is a need for empirical surveys in which the benefit and costs of the mandatory rotation are comparably measured