Do school ties between auditors and client executives influence audit outcomes?

Guan, Yuyan, Su, Lixin (Nancy), Wu, Donghui and Yang, Zhifeng 2016, Do school ties between auditors and client executives influence audit outcomes?, Journal of accounting and economics, vol. 61, no. 2-3, pp. 506-525, doi: 10.1016/j.jacceco.2015.09.003.

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Title Do school ties between auditors and client executives influence audit outcomes?
Author(s) Guan, Yuyan
Su, Lixin (Nancy)
Wu, Donghui
Yang, ZhifengORCID iD for Yang, Zhifeng
Journal name Journal of accounting and economics
Volume number 61
Issue number 2-3
Start page 506
End page 525
Total pages 20
Publisher Elsevier
Place of publication Amsterdam, The Netherlands
Publication date 2016-04
ISSN 0165-4101
Keyword(s) school tie
social network
audit quality
audit fee
Summary We identify connected auditors as those who attended the same university as the executives of their clients. Using manually collected data from China, we find that connected auditors are more likely to issue favorable audit opinions, especially for financially distressed clients. Moreover, companies audited by connected auditors report significantly higher discretionary accruals, are more likely to subsequently restate earnings downward, and have lower earnings response coefficients. Lastly, connected auditors earn higher audit fees. Collectively, our evidence suggests the impairment of audit quality when auditors and client executives have school ties and the presence of social reciprocity derived from school ties.
Language eng
DOI 10.1016/j.jacceco.2015.09.003
Field of Research 150102 Auditing and Accountability
1402 Applied Economics
1501 Accounting, Auditing And Accountability
Socio Economic Objective 910499 Management and Productivity not elsewhere classified
HERDC Research category C1.1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2015, Elsevier
Persistent URL

Document type: Journal Article
Collections: Faculty of Business and Law
Department of Accounting
2018 ERA Submission
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