Who audits the auditor: how disclosing the engagement quality reviewer signals earnings quality to investors?

Zihao Liu, Huaping Wu and Yinwei Huang

Accounting Research Journal, 2026, vol. 39, issue 4-5, 812-833

Abstract: PurposeThis study aims to examine how disclosing engagement quality reviewer (EQ reviewer) information influences investors’ perceptions of financial reporting quality through the lens of the earnings response coefficient, with the aim of highlighting the role of such audit disclosures in enhancing market confidence and the credibility of financial statements.Design/methodology/approachUsing data on EQ reviewer disclosures by all Chinese A-share listed companies from 2020 to 2022, this study uses regression models to examine the impact of disclosing EQ reviewer information on investors’ perception of financial reporting quality.FindingsDisclosing EQ reviewer information significantly enhances investors’ perception of earnings quality, a result robust to multiple tests. Heterogeneity analyses indicate that this effect is stronger among companies with superior governance and those audited by large audit firms. Furthermore, EQ reviewers possessing audit experience, engagement quality review expertise, industry-specific knowledge and higher education levels positively signal earnings quality, whereas overburdened reviewers diminish it.Originality/valueThis study offers novel insights into the literature on audit transparency and earnings quality. They underscore the critical role of reviewer-specific disclosures, providing implications for how audit firms strategically assign EQ reviewers, how companies can enhance their disclosure policies and how regulators and investors might better use auditor-specific information in assessing financial reporting credibility.

Keywords: Engagement quality reviewer; Earnings quality; Earnings response coefficient; Personal characteristics (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:eme:arjpps:arj-09-2025-0344

DOI: 10.1108/ARJ-09-2025-0344

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