An empirical analysis of Hong Kong bankers' perceptions of auditor ability to resist management pressure in an audit conflict situation

This study investigates the effects of financial condition of client, size of audit fees and audit tendering on bankers' perceptions of auditors' ability to resist management pressure in an audit conflict situation. Empirical evidence on auditor independence in recently developed countries (RDCs) such as Hong Kong is needed for two reasons. First, there is a dearth of evidence regarding perceptions of auditor independence in these RDCs and applying the results of studies in developed countries to these RDCs is unsatisfactory. Second, such evidence can enhance our understanding of the role of auditors in different cultural and economic settings and also provide some input into attempts at international harmonization of auditing standards. The results of this study showed that financial condition of the client and size of audit fees were important variables that affected lending officers' perceptions of auditors' ability to resist management pressure. In particular, the results showed that when the client's financial condition was good and when the size of the audit fees was significant, lending officers had less confidence in auditors' ability to resist management pressure.