Abstract
| Original language | English |
|---|---|
| Pages (from-to) | 506-525 |
| Number of pages | 20 |
| Journal | Journal of Accounting and Economics |
| Volume | 61 |
| Issue number | 2/3 |
| Early online date | 28 Sep 2015 |
| DOIs | |
| Publication status | Published - Apr 2016 |
| Externally published | Yes |
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Bibliographical note
Yuyan Guan appreciates Strategic Research Grant from City University of Hong Kong (Project ID: 7004108). Donghui Wu gratefully acknowledges research funding from Business School, The Chinese University of Hong Kong (Project ID: 4057030).Keywords
- Audit fee
- Audit quality
- School tie
- Social network
Cite this
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Do school ties between auditors and client executives influence audit outcomes? / GUAN, Yuyan; SU, Lixin (Nancy); WU, Donghui; YANG, Zhifeng.
In: Journal of Accounting and Economics, Vol. 61, No. 2/3, 04.2016, p. 506-525.Research output: Journal Publications › Journal Article (refereed) › Research › peer-review
TY - JOUR
T1 - Do school ties between auditors and client executives influence audit outcomes?
AU - GUAN, Yuyan
AU - SU, Lixin (Nancy)
AU - WU, Donghui
AU - YANG, Zhifeng
N1 - Yuyan Guan appreciates Strategic Research Grant from City University of Hong Kong (Project ID: 7004108). Donghui Wu gratefully acknowledges research funding from Business School, The Chinese University of Hong Kong (Project ID: 4057030).
PY - 2016/4
Y1 - 2016/4
N2 - We identify connected auditors as those who attended the same university as the executives of their clients. Using manually collected data from China, we find that connected auditors are more likely to issue favorable audit opinions, especially for financially distressed clients. Moreover, companies audited by connected auditors report significantly higher discretionary accruals, are more likely to subsequently restate earnings downward, and have lower earnings response coefficients. Lastly, connected auditors earn higher audit fees. Collectively, our evidence suggests the impairment of audit quality when auditors and client executives have school ties and the presence of social reciprocity derived from school ties.
AB - We identify connected auditors as those who attended the same university as the executives of their clients. Using manually collected data from China, we find that connected auditors are more likely to issue favorable audit opinions, especially for financially distressed clients. Moreover, companies audited by connected auditors report significantly higher discretionary accruals, are more likely to subsequently restate earnings downward, and have lower earnings response coefficients. Lastly, connected auditors earn higher audit fees. Collectively, our evidence suggests the impairment of audit quality when auditors and client executives have school ties and the presence of social reciprocity derived from school ties.
KW - Audit fee
KW - Audit quality
KW - School tie
KW - Social network
UR - http://commons.ln.edu.hk/sw_master/5221
UR - http://www.scopus.com/inward/record.url?scp=84965133891&partnerID=8YFLogxK
U2 - 10.1016/j.jacceco.2015.09.003
DO - 10.1016/j.jacceco.2015.09.003
M3 - Journal Article (refereed)
VL - 61
SP - 506
EP - 525
JO - Journal of Accounting and Economics
JF - Journal of Accounting and Economics
SN - 0165-4101
IS - 2/3
ER -