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The Importance of Partner Narcissism to Audit Quality: Evidence from Taiwan

journal contribution
posted on 2021-11-01, 00:00 authored by Ting-Kai Chou, Jeff PittmanJeff Pittman, Zili Zhuang
ABSTRACT Relying on the size of partner signatures in audit reports in Taiwan to measure their narcissism, we find that audit quality rises with partner narcissism. Our analysis also implies that changes in audit quality are positively associated with changes in partner narcissism stemming from mandatory partner rotation. We also find that the impact of partner narcissism on audit quality only manifests when auditor independence is more likely to be compromised, although it does not vary with engagement complexity. These results suggest that partner narcissism improves audit quality mainly through increased auditor independence, rather than auditor competence. Additionally, we document that although partner narcissism has no perceptible impact on the incidence of Type I going concern reporting errors, it is negatively associated with the probability of making a Type II error, implying that more narcissistic partners are less likely to succumb to client pressure to issue opportunistic reports. Data Availability: Data are available from public sources as identified in the text. JEL Classifications: M40; M42.

History

Journal

Accounting Review

Volume

96

Pagination

103-127

Location

Lakewood Ranch, Fla.

ISSN

0001-4826

eISSN

1558-7967

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal

Issue

6

Publisher

American Accounting Association