One's name represents oneself: Auditor's given names and audit quality

Abstract

In this paper, we investigate the relationship between auditors' given names and audit quality. Using a sample of Chinese listed firms from 2007 to 2023, our analysis reveals that auditors with ethical given names are significantly associated with higher audit quality. The ethical reputation signaled by auditors' given names strengthens their motivation for moral conduct and high audit quality, enabling them to effectively resist client pressure, and this ethical behavior is not driven by the firm's overall reputation. Further analysis indicates that investors respond more positively in the short term when a firm switches to an auditor with an ethical given name. Additionally, our findings suggest that auditors with ethical given names have a more substantial effect on enhancing audit quality when clients are subject to lower analyst coverage or are non-state-owned enterprises. Moreover, auditors with ethical given names and lower levels of education are more likely to uphold ethical behavior, potentially due to having fewer alumni connections. This study introduces a novel and observable characteristic, auditor's given names, thus contributing to the growing body of research on individual auditor characteristics and its impact on audit quality.