Common Auditor and Supply Chain Partners’ Financial Performance

  • Lei ZHUANG (Speaker)

Activity: Talks or PresentationsOther Invited Talks or Presentations


I examine whether a common auditor helps improving the financial performance of the supply chain partners. A common auditor is defined as the auditor that audits the financial statements of both the supplier and the customer in the same year. Common auditor has been considered as playing an information intermediary role among transaction partners. Common auditor could reduce information asymmetry by transferring other partners' information through "soft talk" with managers or by increasing financial statement comparability. I predict that a common auditor can improve supply chain partners' financial performance by reducing information asymmetry between the supplier and the customer in supply chain. Further, as reducing information asymmetry can mitigate the prevalent hold-up problems in supply chain, leading to increased relationship- specific investment between supply chain partners, I predict that the increased relationship-specific investment acts as a mediator on the enhancement effect of the common auditor on the supply chain partner's financial performance. As the enhanced financial performance may increase the probability of contract renewal, I expect that the supplier and the customer with a common auditor will have a longer trading relationship.
Period12 May 2020
Event titlePostgraduate Seminar Series
Event typePublic Lecture