Do Philanthropic Auditors Provide Higher-Quality Audit Services? Evidence From China

IF 2 Q2 BUSINESS, FINANCE
Danping Li, Zhifeng Yang, Keyuan Zhang, Min Zhang
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引用次数: 0

Abstract

Synopsis The research problem This study investigates whether auditors who participate in philanthropic activities (hereafter “philanthropic auditors”) have stronger incentives to deliver high-quality audits than the auditors who do not participate. Motivation Prior studies call for research that examines the difference in audit quality across individual auditors. In recent years, regulators in developed markets, such as the United States and the European Union, have also promulgated new regulations requiring audit firms or public companies to disclose the names of engagement partners. Another growing body of literature examines the effect of economic agents’ personal traits on their decisions and/or firm policies and practices. By examining the impact of individual auditors’ unobservable personal traits on audit quality, measured through their philanthropic actions, we link and contribute to both streams of the above literature. The test hypotheses We test a null hypothesis in this study: individual auditors’ philanthropic activity is not related to their audit quality. Target population Stakeholders of high-quality auditing including accounting regulators, audit firm partners, and company managers. Adopted methodology Ordinary least squares (OLS) regressions and archival data. Analyses In a sample of more than 19,000 Chinese firm-years from 2008 to 2017, we identified 9.40% of the observations were signed by at least one auditor who contributes either money or time to a charitable activity. We used two measures of audit quality: the propensity to issue modified audit opinions (MAOs) and unsigned abnormal discretionary accruals. Findings First, we find that philanthropic auditors are significantly more likely to issue MAOs than are their non-philanthropic counterparts. Second, they are more likely to issue MAOs to distressed companies but not to financially healthy companies. The higher propensity of philanthropic auditors to issue MAOs indicates higher audit quality rather than a higher level of audit conservatism. Third, financial statements audited by philanthropic auditors contain significantly lower discretionary accruals (DACC). Fourth, to mitigate the concern that endogeneity drives our findings, we implement the propensity score matching (PSM) approach and the client fixed effects model. Our finding that philanthropic auditors provide higher-quality audit services than other auditors holds. Fifth, the main results are robust to the inclusion of other individual auditor characteristics, such as gender, educational background, and political affiliation, and to several proxies for individual auditors’ wealth.
慈善审计师提供更高质量的审计服务吗?来自中国的证据
研究问题简介本研究调查了参与慈善活动的审计师(以下简称“慈善审计师”)是否比不参与的审计师更有动力进行高质量的审计。动机先前的研究要求进行研究,以检查各个审计师的审计质量差异。近年来,美国和欧盟等发达市场的监管机构也颁布了新的法规,要求审计公司或上市公司披露审计业务合伙人的姓名。另一个不断增长的文献研究了经济主体的个人特征对其决策和/或公司政策和实践的影响。通过研究个体审计师不可观察的个人特征对审计质量的影响,通过他们的慈善行为来衡量,我们将上述文献的两个流联系起来,并为之做出贡献。检验假设我们在本研究中检验了一个零假设:个体审计师的慈善活动与其审计质量无关。目标人群高质量审计的利益相关者,包括会计监管机构、审计公司合作伙伴和公司经理。采用了最小二乘回归法和档案数据。分析在2008年至2017年的19000多家中国公司的样本中,我们发现9.40%的审计意见是由至少一名为慈善活动捐款或贡献时间的审计师签署的。我们使用了两种审计质量衡量标准:发表修改审计意见的倾向和未签署的异常可自由支配应计项目。研究结果首先,我们发现慈善审计师比非慈善审计师更有可能发布MAO。其次,他们更有可能向陷入困境的公司发行MAO,但不向财务健康的公司发行。慈善审计师发行MAO的倾向越高,表明审计质量越高,而不是审计稳健性水平越高。第三,慈善审计师审计的财务报表包含的可自由支配应计项目(DACC)明显较低。第四,为了减轻内生性驱动我们研究结果的担忧,我们实施了倾向得分匹配(PSM)方法和客户固定效应模型。我们发现慈善审计师提供的审计服务质量高于其他审计师。第五,主要结果有力地包含了其他个人审计师特征,如性别、教育背景和政治派别,以及个人审计师财富的几个指标。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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来源期刊
CiteScore
1.20
自引率
0.00%
发文量
19
期刊介绍: The aim of The International Journal of Accounting is to advance the academic and professional understanding of accounting theory, policies and practice from the international perspective and viewpoint. The Journal editorial recognizes that international accounting is influenced by a variety of forces, e.g., governmental, political and economic. Thus, the primary criterion for manuscript evaluation is the incremental contribution to international accounting literature and the forces that impact the field. The Journal aims at understanding the present and potential ability of accounting to aid in analyzing and interpreting international economic transactions and the economic consequences of such reporting. These transactions may be within a profit or non-profit environment. The Journal encourages a broad view of the origins and development of accounting with an emphasis on its functions in an increasingly interdependent global economy. The Journal also welcomes manuscripts that help explain current international accounting practices, with related theoretical justifications, and identify criticisms of current policies and practice. Other than occasional commissioned papers or special issues, all the manuscripts published in the Journal are selected by the editors after the normal double-blind refereeing process.
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