Do auditors change their individual style? Examining the effects of client importance and competition on auditors' influence on earnings comparability in China

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...

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Main Authors: Chi, Wuchun, Koh, Kevin, Liu, Yanghui, Long, Xiaohai
Other Authors: Nanyang Business School
Format: Article
Language:English
Published: 2023
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Online Access:https://hdl.handle.net/10356/170900
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Institution: Nanyang Technological University
Language: English
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spelling sg-ntu-dr.10356-1709002023-10-12T15:35:37Z Do auditors change their individual style? Examining the effects of client importance and competition on auditors' influence on earnings comparability in China Chi, Wuchun Koh, Kevin Liu, Yanghui Long, Xiaohai Nanyang Business School Business::Auditing Audit Market Competition Client Importance 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. Submitted/Accepted version Wuchun Chi acknowledges funding support from the Taiwan Ministry of Science and Technology (Project: 107-2410-H-004-030-MY3). Yanghui Liu and Xiaohai Long acknowledge funding support from the National Natural Science Foundation of China (Project: 71762034). 2023-10-06T04:00:10Z 2023-10-06T04:00:10Z 2023 Journal Article Chi, W., Koh, K., Liu, Y. & Long, X. (2023). Do auditors change their individual style? Examining the effects of client importance and competition on auditors' influence on earnings comparability in China. International Journal of Auditing. https://dx.doi.org/10.1111/ijau.12325 1090-6738 https://hdl.handle.net/10356/170900 10.1111/ijau.12325 2-s2.0-85164818936 en International Journal of Auditing © 2023 John Wiley & Sons Ltd. All rights reserved. This article may be downloaded for personal use only. Any other use requires prior permission of the copyright holder. The Version of Record is available online at http://doi.org/10.1111/ijau.12325. application/pdf
institution Nanyang Technological University
building NTU Library
continent Asia
country Singapore
Singapore
content_provider NTU Library
collection DR-NTU
language English
topic Business::Auditing
Audit Market Competition
Client Importance
spellingShingle Business::Auditing
Audit Market Competition
Client Importance
Chi, Wuchun
Koh, Kevin
Liu, Yanghui
Long, Xiaohai
Do auditors change their individual style? Examining the effects of client importance and competition on auditors' influence on earnings comparability in China
description 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.
author2 Nanyang Business School
author_facet Nanyang Business School
Chi, Wuchun
Koh, Kevin
Liu, Yanghui
Long, Xiaohai
format Article
author Chi, Wuchun
Koh, Kevin
Liu, Yanghui
Long, Xiaohai
author_sort Chi, Wuchun
title Do auditors change their individual style? Examining the effects of client importance and competition on auditors' influence on earnings comparability in China
title_short Do auditors change their individual style? Examining the effects of client importance and competition on auditors' influence on earnings comparability in China
title_full Do auditors change their individual style? Examining the effects of client importance and competition on auditors' influence on earnings comparability in China
title_fullStr Do auditors change their individual style? Examining the effects of client importance and competition on auditors' influence on earnings comparability in China
title_full_unstemmed Do auditors change their individual style? Examining the effects of client importance and competition on auditors' influence on earnings comparability in China
title_sort do auditors change their individual style? examining the effects of client importance and competition on auditors' influence on earnings comparability in china
publishDate 2023
url https://hdl.handle.net/10356/170900
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