Seeing is believing? Executives' facial trustworthiness, auditor tenure, and audit fees

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

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Original languageEnglish
Article number101260
Journal / PublicationJournal of Accounting and Economics
Issue number1
Online published28 Aug 2019
Publication statusPublished - Feb 2020


Psychology and neuroscience studies document that facial trustworthiness perceptions may affect observers' decision-making process. Our study examines whether auditors' perceptions of client executives' facial trustworthiness are associated with their audit fee decisions. We employ a machine-learning-based face-detection algorithm to measure executives' facial trustworthiness. We find that auditors charge 5.6% less audit fee to firms with trustworthy-looking CFOs than to those with untrustworthy-looking CFOs in initial audit engagements. Auditor tenure weakens the negative association between CFOs' facial trustworthiness and audit fee. Further evidence shows that CFO's facial trustworthiness is associated with neither financial reporting quality nor litigation risk.

Research Area(s)

  • Audit fee, Auditor tenure, CFO, Cognitive bias, Facial trustworthiness

Bibliographic Note

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