IDEAS home Printed from https://ideas.repec.org/a/spr/jknowl/v16y2025i1d10.1007_s13132-024-02039-z.html
   My bibliography  Save this article

The Clan Effect: Exploring the Nexus Between Organizational Culture, Trust, and Audit Economics

Author

Listed:
  • Yanli Li

    (Qinghai Minzu University)

  • Shengxi Xue

    (Jiangxi University of Finance and Economics
    Jiangxi University of Finance and Economics)

  • Xiajun Yi

    (Guangzhou Vocational University of Science and Technology)

  • Bin Zou

    (Jiangxi University of Finance and Economics)

  • Stavros Sindakis

    (Hellenic Open University
    Talient Education)

Abstract

This research investigates the impact of clan cultures and special trust on audit fees within Chinese organizations, elucidating a unique cultural facet of financial oversight in the knowledge economy, innovation, and technology management. By integrating Social Identity Theory, Resource Dependency Theory, and Institutional Theory, the study examines how clan-based cultural dynamics influence auditor–client interactions and auditing practices, affecting audit fees independently of workload considerations. Utilizing quantitative data from 44,375 firms, our analysis reveals that clan cultures necessitate increased auditor effort and prolonged audit tenure, leading to inflated audit fees. This phenomenon underscores the importance of understanding cultural dimensions in the enhancement of audit quality and financial reporting integrity. The findings contribute to the knowledge economy by highlighting the interplay between cultural trust and organizational dynamics in financial oversight, proposing a need for culturally sensitive audit strategies that balance innovation and traditional values. This study not only enriches the literature on auditing and cultural studies but also offers practical insights for auditors, regulatory bodies, and organizations in culturally diverse contexts, advocating for the integration of entrepreneurship and knowledge management practices in auditing to navigate the complexities of clan cultures effectively.

Suggested Citation

  • Yanli Li & Shengxi Xue & Xiajun Yi & Bin Zou & Stavros Sindakis, 2025. "The Clan Effect: Exploring the Nexus Between Organizational Culture, Trust, and Audit Economics," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(1), pages 3175-3213, March.
    • Handle: RePEc:spr:jknowl:v:16:y:2025:i:1:d:10.1007_s13132-024-02039-z
    DOI: 10.1007/s13132-024-02039-z
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s13132-024-02039-z
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s13132-024-02039-z?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Kenneth W. Abbott & Philipp Genschel & Duncan Snidal & Bernhard Zangl, 2021. "Beyond opportunism: Intermediary loyalty in regulation and governance," Regulation & Governance, John Wiley & Sons, vol. 15(S1), pages 83-101, November.
    2. repec:eme:aaaj00:aaaj-01-2020-4400 is not listed on IDEAS
    3. repec:eme:maj000:02686900710759398 is not listed on IDEAS
    4. Laurence Daoust & Bertrand Malsch, 2020. "When the Client Is A Former Auditor: Auditees' Expert Knowledge and Social Capital as Threats to Staff Auditors' Operational Independence†," Contemporary Accounting Research, John Wiley & Sons, vol. 37(3), pages 1333-1369, September.
    5. Mélanie Roussy & Odile Barbe & Sophie Raimbault, 2020. "Internal audit: from effectiveness to organizational significance," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 35(2), pages 322-342, January.
    6. Tommasina Pianese & Luisa Errichiello & Joao Vieira da Cunha, 2023. "Organizational control in the context of remote working: A synthesis of empirical findings and a research agenda," Post-Print hal-04286252, HAL.
    7. Mohammad Hudaib & T.E. Cooke, 2005. "The Impact of Managing Director Changes and Financial Distress on Audit Qualification and Auditor Switching," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(9-10), pages 1703-1739.
    8. Vos, Janita F.J. & Boonstra, Albert, 2022. "The influence of cultural values on Enterprise System adoption, towards a culture – Enterprise System alignment theory," International Journal of Information Management, Elsevier, vol. 63(C).
    9. Olivier Herrbach, 2001. "Audit quality, auditor behaviour and the psychological contract," European Accounting Review, Taylor & Francis Journals, vol. 10(4), pages 787-802.
    10. Suham Cahyono & Iman Harymawan & Damara Ardelia Kusuma Wardani & Khairul Anuar Kamarudin, 2023. "Does auditor ethnicity matter in determining audit fees? Some empirical evidence from Indonesia," Accounting Research Journal, Emerald Group Publishing Limited, vol. 36(4/5), pages 384-414, July.
    11. Mohamed Karim Sorour & Mark Boadu & Teerooven Soobaroyen, 2021. "The role of Corporate Social Responsibility in Organisational Identity Communication, Co-Creation and Orientation," Journal of Business Ethics, Springer, vol. 173(1), pages 89-108, September.
    12. Porcu, Lucia & del Barrio-García, Salvador & Kitchen, Philip J. & Tourky, Marwa, 2020. "The antecedent role of a collaborative vs. a controlling corporate culture on firm-wide integrated marketing communication and brand performance," Journal of Business Research, Elsevier, vol. 119(C), pages 435-443.
    13. Wen Qu & Philomena Leung, 2006. "Cultural impact on Chinese corporate disclosure – a corporate governance perspective," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 21(3), pages 241-264, March.
    14. Cristina Thomas Alberti & Jean C. Bedard & Olof Bik & Ann Vanstraelen, 2022. "Audit Firm Culture: Recent Developments and Trends in the Literature," European Accounting Review, Taylor & Francis Journals, vol. 31(1), pages 59-109, January.
    15. Huang, Liangxiong & Ma, Minghui & Wang, Xianbin, 2022. "Clan culture and risk-taking of Chinese enterprises," China Economic Review, Elsevier, vol. 72(C).
    16. Christopher Humphrey, 2008. "Auditing research: a review across the disciplinary divide," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 21(2), pages 170-203, February.
    17. Mohammad Hudaib & T.E. Cooke, 2005. "The Impact of Managing Director Changes and Financial Distress on Audit Qualification and Auditor Switching," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(9‐10), pages 1703-1739, November.
    18. Robert H. Chenhall & Frank Moers, 2007. "Endogeneity: A Reply to Two Different Perspectives," European Accounting Review, Taylor & Francis Journals, vol. 16(1), pages 217-221.
    19. repec:eme:maj000:02686900610652991 is not listed on IDEAS
    20. repec:eme:aaaj00:09513570810854392 is not listed on IDEAS
    21. Ronald A. Davidson & Dean Neu, 1993. "A Note on the Association between Audit Firm Size and Audit Quality," Contemporary Accounting Research, John Wiley & Sons, vol. 9(2), pages 479-488, March.
    22. Erica Pimentel & Cédric Lesage & Soraya Bel Hadj Ali, 2023. "Auditor Independence in Kinship Economies: A MacIntyrian Perspective," Journal of Business Ethics, Springer, vol. 183(2), pages 365-381, March.
    23. Jessen L. Hobson & Matthew T. Stern & Aaron F. Zimbelman, 2020. "The Benefit of Mean Auditors: The Influence of Social Interaction and the Dark Triad on Unjustified Auditor Trust," Contemporary Accounting Research, John Wiley & Sons, vol. 37(2), pages 1217-1247, June.
    24. Fubing Su & Tao Ran & Xin Sun & Mingxing Liu, 2011. "Clans, Electoral Procedures and Voter Turnout: Evidence from Villagers' Committee Elections in Transitional China," Political Studies, Political Studies Association, vol. 59(2), pages 432-457, June.
    25. Kim K. Jeppesen, 2007. "Organizational risk in large audit firms," Managerial Auditing Journal, Emerald Group Publishing Limited, vol. 22(6), pages 590-603, July.
    26. Prem Prasad Silwal, 2022. "Corporate cultures and financial performance: The mediating role of firm innovation," Cogent Business & Management, Taylor & Francis Journals, vol. 9(1), pages 2010480-201, December.
    27. Christopher Humphrey, 2008. "Auditing research: a review across the disciplinary divide," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 21(2), pages 170-203, February.
    28. Christopher Humphrey & Amanda Sonnerfeldt & Naoko Komori & Emer Curtis, 2021. "Audit and the Pursuit of Dynamic Repair," European Accounting Review, Taylor & Francis Journals, vol. 30(3), pages 445-471, May.
    29. Kim K. Jeppesen, 2007. "Organizational risk in large audit firms," Managerial Auditing Journal, Emerald Group Publishing, vol. 22(6), pages 590-603, July.
    30. Pall Rikhardsson & Carsten Rohde & Leif Christensen & Catherine E. Batt, 2021. "Management controls and crisis: evidence from the banking sector," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 34(4), pages 757-785, February.
    31. Knechel, W. Robert & Thomas, Edward & Driskill, Matthew, 2020. "Understanding financial auditing from a service perspective," Accounting, Organizations and Society, Elsevier, vol. 81(C).
    32. repec:eme:maj000:maj-01-2019-2162 is not listed on IDEAS
    33. Jun Huang & Yun Li & Ming Dai & Feifei Han, 2023. "Risk Perception and Audit Fees: How Do Auditors Respond When Working with Hometown CEOs?," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 59(4), pages 1179-1204, March.
    34. Anna Samsonova-Taddei, 2013. "Social Relations and the Differential Local Impact of Global Standards: The Case of International Standards on Auditing," Abacus, Accounting Foundation, University of Sydney, vol. 49(4), pages 506-538, December.
    35. Azeem, Muhammad & Ahmed, Munir & Haider, Sajid & Sajjad, Muhammad, 2021. "Expanding competitive advantage through organizational culture, knowledge sharing and organizational innovation," Technology in Society, Elsevier, vol. 66(C).
    36. Timothy B. Bell & Rajib Doogar & Ira Solomon, 2008. "Audit Labor Usage and Fees under Business Risk Auditing," Journal of Accounting Research, Wiley Blackwell, vol. 46(4), pages 729-760, September.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Espinosa-Pike, Marcela & Barrainkua, Itsaso, 2016. "An exploratory study of the pressures and ethical dilemmas in the audit conflict," Revista de Contabilidad - Spanish Accounting Review, Elsevier, vol. 19(1), pages 10-20.
    2. Wu, Chloe Yu-Hsuan & Hsu, Hwa-Hsien & Haslam, Jim, 2016. "Audit committees, non-audit services, and auditor reporting decisions prior to failure," The British Accounting Review, Elsevier, vol. 48(2), pages 240-256.
    3. Yongjun Tang & Qi Li & Fen Zhou & Mingjia Sun, 2024. "Does Clan Culture Promote Corporate Natural Resource Disclosure? Evidence from Chinese Natural Resource-Based Listed Companies," Journal of Business Ethics, Springer, vol. 192(1), pages 167-190, June.
    4. Ahsan Habib & Mabel D' Costa & Hedy Jiaying Huang & Md. Borhan Uddin Bhuiyan & Li Sun, 2020. "Determinants and consequences of financial distress: review of the empirical literature," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 60(S1), pages 1023-1075, April.
    5. Persakis, Anthony & Iatridis, George Emmanuel, 2016. "Audit quality, investor protection and earnings management during the financial crisis of 2008: An international perspective," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 41(C), pages 73-101.
    6. Panagiotis Dimitropoulos, 2016. "Audit Selection in the European Football Industry under Union of European Football Associations Financial Fair Play," International Journal of Economics and Financial Issues, Econjournals, vol. 6(3), pages 901-906.
    7. Liu, Feifei & He, Xinming & Wang, Tao, 2023. "In the name of the family: The effect of CEO clan culture background on firm internationalization," Journal of Business Research, Elsevier, vol. 161(C).
    8. Dorine Mattar & Rim El Khoury & Melissa Chaanine, 2024. "Factors Affecting Auditor Change Decisions: The Case of United Kingdom," SAGE Open, , vol. 14(3), pages 21582440241, July.
    9. Mst. Maksuda Begum & Niluthpaul Sarker & Shamsun Nahar, 2023. "The Impact of Corporate Governance Attributes on Financial Distress among the Listed Firms in Pharmaceuticals Industry of Bangladesh," International Journal of Economics and Financial Issues, Econjournals, vol. 13(6), pages 155-167, November.
    10. Linda Myers & Jaime Schmidt & Michael Wilkins, 2014. "An investigation of recent changes in going concern reporting decisions among Big N and non-Big N auditors," Review of Quantitative Finance and Accounting, Springer, vol. 43(1), pages 155-172, July.
    11. Heliodoro, Paula Alexandra & Carreira, Francisco Alegria & Lopes, Manuel Mouta, 2016. "The change of auditor: The Portuguese case," Revista de Contabilidad - Spanish Accounting Review, Elsevier, vol. 19(2), pages 181-186.
    12. Nora Muñoz-Izquierdo & José Manuel Jiménez Mazarío & María-del-Mar Camacho-Miñano, 2024. "Zombie firms and disclosures in the expanded audit report," Review of Managerial Science, Springer, vol. 18(6), pages 1519-1555, June.
    13. Mansour Saaydah, 2021. "Factors Causing Discretionary Auditor Change in the Insurance Industry: Evidence from Jordan," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(2), pages 344-362.
    14. Christine Noël Le maitre & Cathy Krohmer, 2010. "L’éthique est-elle (vraiment) une compétence clef des auditeurs légaux?," Revue Finance Contrôle Stratégie, revues.org, vol. 13(4), pages 75-100., December.
    15. Totok Budisantoso & Rahmawati Rahmawati & Bandi Bandi & Agung Nur Probohudono, 2017. "Audit Opinion Accuracy, Corporate Governance and Downward Auditor Switching: A Study of Association of Southeast Asian Nations Economics Community," International Journal of Economics and Financial Issues, Econjournals, vol. 7(5), pages 530-540.
    16. Weetman, Pauline, 2006. "Discovering the ‘international’ in accounting and finance," The British Accounting Review, Elsevier, vol. 38(4), pages 351-370.
    17. Tasawar Nawaz, 2019. "Exploring the Nexus Between Human Capital, Corporate Governance and Performance: Evidence from Islamic Banks," Journal of Business Ethics, Springer, vol. 157(2), pages 567-587, June.
    18. Christoph Mauritz & Martin Nienhaus & Christopher Oehler, 2023. "The role of individual audit partners for narrative disclosures," Review of Accounting Studies, Springer, vol. 28(1), pages 1-44, March.
    19. Efstathios KIRKOS, 2012. "Predicting Auditor Switches By Applying Data Mining," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 7(3(21)/ Fa), pages 246-261.
    20. Ines Gharbi & Mounira Hamed‐Sidhom & Khaled Hussainey & Janet Ganouati, 2021. "Religiosity and financial distress in U.S. firms," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(3), pages 3902-3915, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:jknowl:v:16:y:2025:i:1:d:10.1007_s13132-024-02039-z. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.