Diversity of signing auditors and audit quality: Evidence from capital market in China

Manoj Athavale, Zhaorui Guo, Yun Meng and Tianshu Zhang

International Review of Economics & Finance, 2022, vol. 78, issue C, 554-571

Abstract: We examine whether the diversity of signing auditors affects audit quality of listed firms in China. Using the Blau's index of diversity measure based on eight characteristics of signing auditors and a series of audit quality proxies, including modified audit opinions (MAO), restatement of annual financial reports (Restate), and discretionary accruals (DA), we document a negative relationship between the diversity of signing auditors and firms' audit quality. Additional analyses show that corporate governance, signing auditor and audit firm characteristics moderate the relationship between the diversity of signing auditors and audit quality. Our findings suggest that reducing the diversity of signing auditors is an effective way to improve audit quality.

Keywords: Diversity of signing auditors; Audit quality; Modified audit opinion; Earnings management (search for similar items in EconPapers)
JEL-codes: J24 M41 M42 (search for similar items in EconPapers)
Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:78:y:2022:i:c:p:554-571

DOI: 10.1016/j.iref.2021.12.020

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