Abstract
| Original language | English |
|---|---|
| Pages (from-to) | 21-48 |
| Number of pages | 28 |
| Journal | Review of Accounting Studies |
| Volume | 11 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 1 Mar 2006 |
Fingerprint
Keywords
- Audit qualifications
- Auditor locality
- Auditor switches
- Economic dependence
- Political influence
Cite this
}
A political-economic analysis of auditor reporting and auditor switches. / CHAN, Koon Hung; LIN, Zhenpin, Kenny; MO, Lai Lan, Phyllis.
In: Review of Accounting Studies, Vol. 11, No. 1, 01.03.2006, p. 21-48.Research output: Journal Publications › Journal Article (refereed)
TY - JOUR
T1 - A political-economic analysis of auditor reporting and auditor switches
AU - CHAN, Koon Hung
AU - LIN, Zhenpin, Kenny
AU - MO, Lai Lan, Phyllis
PY - 2006/3/1
Y1 - 2006/3/1
N2 - This study examines whether auditor opinions are affected by political and economic influences from governments. We use auditor locality (local versus non-local) to capture such influences from local governments in China. Based on data from China's stock markets for the period 1996-2002, we find that local auditors, who have greater economic dependence on local clients and are subject to more political influence from local governments than non-local auditors, are inclined to report favorably on local government-owned companies to mitigate probable economic losses. Moreover, companies with qualified opinions are more likely to switch from a non-local auditor to a local auditor than companies with unqualified opinions. Contrary to some prior studies, we find that in China's political environment, local government-owned companies that switched from a non-local auditor to a local auditor after receiving a qualified opinion can succeed in opinion shopping.
AB - This study examines whether auditor opinions are affected by political and economic influences from governments. We use auditor locality (local versus non-local) to capture such influences from local governments in China. Based on data from China's stock markets for the period 1996-2002, we find that local auditors, who have greater economic dependence on local clients and are subject to more political influence from local governments than non-local auditors, are inclined to report favorably on local government-owned companies to mitigate probable economic losses. Moreover, companies with qualified opinions are more likely to switch from a non-local auditor to a local auditor than companies with unqualified opinions. Contrary to some prior studies, we find that in China's political environment, local government-owned companies that switched from a non-local auditor to a local auditor after receiving a qualified opinion can succeed in opinion shopping.
KW - Audit qualifications
KW - Auditor locality
KW - Auditor switches
KW - Economic dependence
KW - Political influence
UR - http://commons.ln.edu.hk/sw_master/1940
U2 - 10.1007/s11142-006-6394-z
DO - 10.1007/s11142-006-6394-z
M3 - Journal Article (refereed)
VL - 11
SP - 21
EP - 48
JO - Review of Accounting Studies
JF - Review of Accounting Studies
SN - 1380-6653
IS - 1
ER -