This study examines how Dutch audit firms changed their policies for audit partner performance measurement, career development, and compensation during a period of heightened public scrutiny (2007–2017), and whether those changes translated into day‑to‑day practices.
Using proprietary policy documents and partner‑level performance and compensation data from the eight largest audit firms in the Netherlands, the authors find that audit quality became more consequential for promotions, demotions, and job retention, while profit sharing shifted toward longer‑term performance and was complemented by penalties (and claw‑backs) for low quality.
Overall, firms appear responsive to public scrutiny, aligning partner incentives more closely with societal expectations of audit quality.
