Does the Identity of Engagement Auditor s Affect Audit Clients’ Real Activities Manipulation? Evidence fr om China

In this study, we explor e whether and how the identify of engagement auditor s affects audit clients’ r eal activities manipulation (RAM) . Based on a hand­ collected dataset between year s 1999 and 2012 fr om China in which auditor identity and other demogr aphic information ar e r equir ed to be publicly disclosed, we compute abnormal cash flows, abnormal pr oduction costs, and abnormal expenditur es to pr oxy for RAM. We find that significant var iations exist in RAM and individual auditor s have economically significant influences over RAM. Mor e specifically, size of audit firms, length of auditor tenur es, and style of auditor s (which can be par tly explained by auditor s’ demogr aphics such as age, gender , education backgr ound, political affiliation, and auditing exper ience) do affect RAM differ ently. Our findings contr ibute to the gr owing liter atur e on the impor tance of auditor identity disclosur e affecting audit quality.