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Place attachment, audit pricing and audit quality

Author

Listed:
  • Yuan, Shuai
  • Zhang, Wuxue
  • Zhu, Kaiwen

Abstract

Place attachment is an affective bond whereby people interact with and describe themselves as belonging to specific places. This study investigates the presence of place attachment in the auditing process. Using a large sample of listed clients in China, the findings reveal that auditors are likely to charge higher fees if their colleges are located in the same cities or provinces as their clients, supporting the familiarity bias hypothesis. This effect is more concentrated among smaller auditors, non-state-owned clients, and clients who switch auditors between years. In addition, a negative relationship is found between audit quality and geographical connections between auditors and clients. Overall, the results indicate the existence of place attachment in the auditing process.

Suggested Citation

  • Yuan, Shuai & Zhang, Wuxue & Zhu, Kaiwen, 2023. "Place attachment, audit pricing and audit quality," Journal of Contemporary Accounting and Economics, Elsevier, vol. 19(2).
    • Handle: RePEc:eee:jocaae:v:19:y:2023:i:2:s1815566923000152
    DOI: 10.1016/j.jcae.2023.100365
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    More about this item

    Keywords

    Place attachment; Audit pricing; Audit quality; Familiarity bias;
    All these keywords.

    JEL classification:

    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • M4 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting

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