Client importance and audit quality in highly connected jurisdictions
The study focuses on the audit quality issue in three culturally and commercially highly connected jurisdictions with very different legal systems which affect auditors. Hong Kong practices common law, Taiwan practices civil law, and the People’s Republic of China (Mainland China) practices a social...
| Main Author: | |
|---|---|
| Format: | Others |
| Language: | en |
| Published: |
Digital Commons @ Lingnan University
2016
|
| Subjects: | |
| Online Access: | https://commons.ln.edu.hk/acct_etd/22 https://commons.ln.edu.hk/cgi/viewcontent.cgi?article=1022&context=acct_etd |
| Summary: | The study focuses on the audit quality issue in three culturally and commercially highly connected jurisdictions with very different legal systems which affect auditors. Hong Kong practices common law, Taiwan practices civil law, and the People’s Republic of China (Mainland China) practices a socialist legal system. Taiwan adopts a civil law system with heavy influence by common law countries. It is therefore motivating to assess how auditors in each of the three connected jurisdictions with distinctive legal environments handle the audit quality for important clients. Accounting scandals and auditing frauds are perceived to be driven by aggressive companies and misrepresentation of audit reports. However, a locale’s legal system and law enforcements should affect the services auditors provide to their clients, particularly ‘important’ clients. I find that in all three jurisdictions, the more important the client to its auditor, the lower the audit quality as measured by restatement of financial statements. However, I find mixed results when using other measures of audit quality. |
|---|