Signing Auditors’ Red Origin and Audit Quality

Hao Xiong, Yuhe Liu, Chao Liu, Fei Hou and Siyao Chen

Emerging Markets Finance and Trade, 2025, vol. 61, issue 15, 4633-4655

Abstract: This paper explores the effect of signing auditors’ red origin on audit quality. Using a sample of Chinese listed firms, we show that signing auditors with red cultural background are negatively associated with earnings management, indicating that these signing auditors are capable to provide high audit quality. In addition, we find that firms who are audited by signing auditors with red cultural background have high likelihood to receive modified audit opinion, lower likelihood of financial statements and small profit. Further, empirical results show the education level of signing auditors mitigates the above relationship. After applying propensity score matching approach, Heckman two-stage method, and placebo tests, our results still stand.

Date: 2025
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DOI: 10.1080/1540496X.2025.2508879

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