Place attachment, audit pricing and audit quality

Shuai Yuan, Wuxue Zhang and Kaiwen Zhu

Journal of Contemporary Accounting and Economics, 2023, vol. 19, issue 2

Abstract: Place attachment is an affective bond whereby people interact with and describe themselves as belonging to specific places. This study investigates the presence of place attachment in the auditing process. Using a large sample of listed clients in China, the findings reveal that auditors are likely to charge higher fees if their colleges are located in the same cities or provinces as their clients, supporting the familiarity bias hypothesis. This effect is more concentrated among smaller auditors, non-state-owned clients, and clients who switch auditors between years. In addition, a negative relationship is found between audit quality and geographical connections between auditors and clients. Overall, the results indicate the existence of place attachment in the auditing process.

Keywords: Place attachment; Audit pricing; Audit quality; Familiarity bias (search for similar items in EconPapers)
JEL-codes: M1 M4 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jocaae:v:19:y:2023:i:2:s1815566923000152

DOI: 10.1016/j.jcae.2023.100365

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