File(s) under permanent embargo
Auditor disaffiliation program in China and auditor independence
journal contribution
posted on 2009-05-01, 00:00 authored by Ferdinand GulFerdinand Gul, H Sami, H ZhouThis study examines whether the disaffiliation program introduced by the Chinese government improved auditor independence and whether auditor quality affects this relationship. Auditor independence is measured in terms of the likelihood of receiving a qualified report and the level of earnings management (measured by non-core operating income). The results show that the likelihood of receiving qualified audit opinions for listed companies significantly increased, and noncore operating earnings significantly decreased, after auditors were disaffiliated. However, companies audited by auditors without any affiliation also showed an increase in the likelihood of receiving qualified opinions and a decrease in noncore operating earnings, possibly because of the increased surveillance by the regulatory bodies that accompanied the act of disaffiliation. The results also show that the association between the disaffiliation program and the likelihood of receiving qualified audit opinions is stronger for small auditors than for large auditors, possibly because of the initial lower audit quality of small auditors. Auditor size, however, did not significantly affect the association between the disaffiliation program and noncore operating earnings.
History
Journal
AuditingVolume
28Issue
1Pagination
29 - 51Publisher DOI
ISSN
0278-0380eISSN
1558-7991Publication classification
C Journal article; C1.1 Refereed article in a scholarly journalCopyright notice
2009, American Accounting AssociationUsage metrics
Categories
No categories selectedKeywords
Licence
Exports
RefWorks
BibTeX
Ref. manager
Endnote
DataCite
NLM
DC