Using a unique dataset of audit days in China from 2006 to 2011,this paper examines the relationship between audit effort and audit quality from the perspective of audit process and audit output.The results show that ...Using a unique dataset of audit days in China from 2006 to 2011,this paper examines the relationship between audit effort and audit quality from the perspective of audit process and audit output.The results show that audit effort significantly increases the probability of audit adjustments,which inhibits positive earnings management and improves the quality of audited financial statements.We also find that audit effort does not have a significant effect on the issuance of modified audit opinions overall,but that a modified audit opinion is more likely to be issued in the absence of an audit adjustment.Furthermore,we find that the impact of audit effort on audit quality is attenuated when clients are more complex and when audit firms are larger.Collectively,our evidence suggests that audit effort plays an important role in improving audit quality by influencing audit process and audit output.Our study extends the literature on the impact of audit effort on audit quality in emerging markets,and the conclusions have important implications for the improvement of China’s audit market efficiency.展开更多
This study investigates changes in audit strategy in China following the introduction of risk-based auditing standards rather than an internal control-based audit mode.Specifically,we examine whether auditors are impl...This study investigates changes in audit strategy in China following the introduction of risk-based auditing standards rather than an internal control-based audit mode.Specifically,we examine whether auditors are implementing the risk-based audit mode to evaluate corporate governance before distributing audit resources.The results show that under the internal control-based audit mode,the relationship between audit effort and corporate governance was weak.However,implementation of the risk-based mode required by the new auditing standards has significantly enhanced the relationship between audit effort and corporate governance.Since the change in audit mode,the Big Ten have demonstrated a significantly better grasp of governance risk and allocated their audit effort accordingly,relative to smaller firms.The empirical evidence indicates that auditors have adjusted their audit strategy to meet the regulations,risk-based auditing is being achieved to a degree,reasonable and effective corporate governance helps to optimize audit resource allocation,and smaller auditing firms in particular should urgently strengthen their risk-based auditing capability.Overall,our findings imply that the mandatory switch to risk-based auditing has optimized audit effort in China.展开更多
We examine auditor responses to the voluntary resignation of independent directors.We show that auditors respond by increasing audit fees or rescinding engagement with their clients,but not by increasing their audit e...We examine auditor responses to the voluntary resignation of independent directors.We show that auditors respond by increasing audit fees or rescinding engagement with their clients,but not by increasing their audit effort.Mechanism tests reveal that independent directors’voluntary resignation leads to increased regulatory sanctions and negative media coverage,these relationships are more pronounced after the New Securities Law.Auditor response strategies follow an order of priority:at an acceptable level of perceived risk,auditors increase audit fees;when perceived risk exceeds this level,auditors will discontinue the client relationship.Auditors associate greater risk with firms that have(vs.have not)experienced consecutive voluntary resignations by independent directors.Mandatory resignation has no such effect.展开更多
We investigate the impact of industry information disclosure(IID)on audit quality in Chinese listed companies from 2010 to 2021,by constructing a staggered difference-in-differences model based on the implementation o...We investigate the impact of industry information disclosure(IID)on audit quality in Chinese listed companies from 2010 to 2021,by constructing a staggered difference-in-differences model based on the implementation of the IID guidelines in the Shanghai and Shenzhen stock exchanges in 2013 as an exogenous shock.Audit quality is significantly improved after the implementation of the IID guidelines.We also use a parallel trend test,different measurements of key variables,propensity score matching,a placebo test and different samples,to ensure the validity of our findings.IID enhances audit quality by improving auditor independence,professionalism and audit engagement,particularly in firms with high-quality and numerous IIDs,high auditor rankings,strong auditor industry expertise,IIDs with a negative tone and low R&D investment.We demonstrate the effectiveness of the IID guidelines from the perspective of auditing.展开更多
基金financial support from the National Natural Science Foundation of China(No.71402197)financial support from the National Natural Science Foundation of China(No.71872199)+2 种基金the Young Elite Teacher Project(No.QYP1803)the Program for Innovation ResearchChina’s Management Accounting Research and Development Center in the Central University of Finance and Economics.
文摘Using a unique dataset of audit days in China from 2006 to 2011,this paper examines the relationship between audit effort and audit quality from the perspective of audit process and audit output.The results show that audit effort significantly increases the probability of audit adjustments,which inhibits positive earnings management and improves the quality of audited financial statements.We also find that audit effort does not have a significant effect on the issuance of modified audit opinions overall,but that a modified audit opinion is more likely to be issued in the absence of an audit adjustment.Furthermore,we find that the impact of audit effort on audit quality is attenuated when clients are more complex and when audit firms are larger.Collectively,our evidence suggests that audit effort plays an important role in improving audit quality by influencing audit process and audit output.Our study extends the literature on the impact of audit effort on audit quality in emerging markets,and the conclusions have important implications for the improvement of China’s audit market efficiency.
基金supported by grants from the National Natural Science Foundation of China(Project No.71472047)Humanities and Social Science Foundation of the Ministry of Education of China(Project No.13YJC630080)+1 种基金Young and Middle-aged Teacher Education and Science Research Foundation of Fujian Province of China(Project No.JA13047S)Social Science Research Planning Foundation of Fujian Province of China(Project No.2014B022)
文摘This study investigates changes in audit strategy in China following the introduction of risk-based auditing standards rather than an internal control-based audit mode.Specifically,we examine whether auditors are implementing the risk-based audit mode to evaluate corporate governance before distributing audit resources.The results show that under the internal control-based audit mode,the relationship between audit effort and corporate governance was weak.However,implementation of the risk-based mode required by the new auditing standards has significantly enhanced the relationship between audit effort and corporate governance.Since the change in audit mode,the Big Ten have demonstrated a significantly better grasp of governance risk and allocated their audit effort accordingly,relative to smaller firms.The empirical evidence indicates that auditors have adjusted their audit strategy to meet the regulations,risk-based auditing is being achieved to a degree,reasonable and effective corporate governance helps to optimize audit resource allocation,and smaller auditing firms in particular should urgently strengthen their risk-based auditing capability.Overall,our findings imply that the mandatory switch to risk-based auditing has optimized audit effort in China.
基金support from the National Social Science Fund of China(grant number:20BJY029).
文摘We examine auditor responses to the voluntary resignation of independent directors.We show that auditors respond by increasing audit fees or rescinding engagement with their clients,but not by increasing their audit effort.Mechanism tests reveal that independent directors’voluntary resignation leads to increased regulatory sanctions and negative media coverage,these relationships are more pronounced after the New Securities Law.Auditor response strategies follow an order of priority:at an acceptable level of perceived risk,auditors increase audit fees;when perceived risk exceeds this level,auditors will discontinue the client relationship.Auditors associate greater risk with firms that have(vs.have not)experienced consecutive voluntary resignations by independent directors.Mandatory resignation has no such effect.
基金supported by the National Natural Science Foundation of China(Project Nos.71790603,72072190)the China Postdoctoral Science Foundation(Project No.2023M733331).
文摘We investigate the impact of industry information disclosure(IID)on audit quality in Chinese listed companies from 2010 to 2021,by constructing a staggered difference-in-differences model based on the implementation of the IID guidelines in the Shanghai and Shenzhen stock exchanges in 2013 as an exogenous shock.Audit quality is significantly improved after the implementation of the IID guidelines.We also use a parallel trend test,different measurements of key variables,propensity score matching,a placebo test and different samples,to ensure the validity of our findings.IID enhances audit quality by improving auditor independence,professionalism and audit engagement,particularly in firms with high-quality and numerous IIDs,high auditor rankings,strong auditor industry expertise,IIDs with a negative tone and low R&D investment.We demonstrate the effectiveness of the IID guidelines from the perspective of auditing.
