Do auditors change their individual style? Examining the effects of client importance and competition on auditors' influence on earnings comparability in China
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Abstract
Individual auditor style implies that two client firms audited by the same individual auditors are likely to have more comparable earnings than two client firms audited by different individual auditors within the same audit firm. We investigate whether auditors in China change their individual style to cater to demands of clients that are of high importance and are located in a competitive audit market. Using a propensity score match approach, we find evidence of higher earnings comparability between a pair of client firms audited by the same individual auditors. However, in subsamples of client firm pairs that are of high importance or are located in a competitive audit market, we find earnings comparability of client firms audited by the same individual auditors diminishes. Our findings suggest that due to the influence of economic bonding in auditor–client relations in China, individual auditors change their style to cater to client demands.
期刊介绍：
In addition to communicating the results of original auditing research, the International Journal of Auditing also aims to advance knowledge in auditing by publishing critiques, thought leadership papers and literature reviews on specific aspects of auditing. The journal seeks to publish articles that have international appeal either due to the topic transcending national frontiers or due to the clear potential for readers to apply the results or ideas in their local environments. While articles must be methodologically and theoretically sound, any research orientation is acceptable. This means that papers may have an analytical and statistical, behavioural, economic and financial (including agency), sociological, critical, or historical basis. The editors consider articles for publication which fit into one or more of the following subject categories: • Financial statement audits • Public sector/governmental auditing • Internal auditing • Audit education and methods of teaching auditing (including case studies) • Audit aspects of corporate governance, including audit committees • Audit quality • Audit fees and related issues • Environmental, social and sustainability audits • Audit related ethical issues • Audit regulation • Independence issues • Legal liability and other legal issues • Auditing history • New and emerging audit and assurance issues
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