Is Leadership Ability Rewarded by the Auditing Profession?

Today’s business world calls for leaders, and the auditing profession is no exception. Informed by emerging research on individual auditors, we investigate whether and how leadership ability, an attribute the auditing profession strongly emphasizes, is rewarded by the audit labor market. Using unique Swedish register data on qualified auditors, we show that leadership ability is a strong predictor of CPAs’ job-related income and career success. We also document that the labor market return to auditors’ leadership ability is related to revenue-generating activities. Our results speak to the auditing profession’s talent management challenges as we find that leadership ability is rewarded relatively late in the career, and monotonically increases for older age groups. Further, for those who depart the auditing profession, the return to their leadership ability is significantly higher after leaving. Our findings are salient given the concerns about the attractiveness and sustainability of the auditing profession