Audit Partners’ Cultural Heritage and Audit Outcomes

Research output: Conference Papers (RGC: 31A, 31B, 32, 33)33_Other conference paper

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Author(s)

Related Research Unit(s)

Detail(s)

Original languageEnglish
Publication statusPresented - 28 Jun 2023

Workshop

TitleJoint Accounting Research Workshop 2023
PlaceChina
CityHong Kong
Period28 - 29 June 2023

Abstract

Economic theories on attitude formation emphasize that culture plays a fundamental role in shaping individual beliefs and preferences. Building on this work, we document robust evidence that audit partners who descended from trusting cultures are less likely to issue going concern opinions relative to their peers. This effect is not driven by trusting partners being gullible and failing to issue going concern opinions when their clients subsequently go bankrupt. Instead, this effect is driven by trusting partners not being excessively conservative and committing fewer Type I errors. Consistent with this interpretation, we find no evidence that trusting partners are associated with lower client financial reporting quality. Further analyses reveal that cultural trust matters less when a partner has more industry-specific experience or has less influence on an audit. Collectively, our findings provide novel evidence on whether and under what conditions audit partners’ cultural trust influences the assurance of accounting information.

Research Area(s)

  • Audit Partners, Culture, Inherited Trust

Bibliographic Note

Research Unit(s) information for this publication is provided by the author(s) concerned.

Citation Format(s)

Audit Partners’ Cultural Heritage and Audit Outcomes. / Khurana, Inder; Li, Bing; Yeung, Kelvin et al.
2023. Joint Accounting Research Workshop 2023, Hong Kong, China.

Research output: Conference Papers (RGC: 31A, 31B, 32, 33)33_Other conference paper