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Does Ethical Culture in Audit Firms Support Auditor Objectivity?


  • Jan Svanberg
  • Peter Öhman


The suggested cause of constrained auditor objectivity has been centred on auditors' financial incentives and long audit tenure. Recent research has challenged those assumptions and questioned the effectiveness of auditor rotation to counteract short-tenure threats to auditor objectivity. Audit firms and regulators need to adopt methods for enhancing auditor objectivity that are effective in various auditor--client relationships. This study examines whether audit firm ethical culture is positively related to auditor objectivity. Based on the responses of 281 practising auditors, the findings indicate that auditors are more likely to make objective judgments in ethical cultures characterized by the rewarding of ethical behaviour and punishment of unethical behaviour, prevalence of ethical norms, visible ethical leadership, and low emphasis on obedience to authority. In conclusion, evidence indicates that auditors in audit firms with a strong ethical culture are more likely to maintain auditor objectivity than are auditors in less supportive cultures. This suggests that audit firms should promote a strong ethical culture to reduce the risk of constrained auditor judgment.

Suggested Citation

  • Jan Svanberg & Peter Öhman, 2016. "Does Ethical Culture in Audit Firms Support Auditor Objectivity?," Accounting in Europe, Taylor & Francis Journals, vol. 13(1), pages 65-79, April.
  • Handle: RePEc:taf:acceur:v:13:y:2016:i:1:p:65-79
    DOI: 10.1080/17449480.2016.1164324

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    References listed on IDEAS

    1. Jan Svanberg & Peter Öhman, 2013. "Auditors' time pressure: does ethical culture support audit quality?," Managerial Auditing Journal, Emerald Group Publishing, vol. 28(7), pages 572-591, July.
    2. William E. Shafer & Zhihong Wang, 2010. "Effects of ethical context on conflict and commitment among Chinese accountants," Managerial Auditing Journal, Emerald Group Publishing, vol. 25(4), pages 377-400, April.
    3. Windsor, Carolyn A. & Ashkanasy, Neal M., 1995. "The effect of client management bargaining power, moral reasoning development, and belief in a just world on auditor independence," Accounting, Organizations and Society, Elsevier, vol. 20(7-8), pages 701-720.
    4. Treviño, Linda Klebe & Butterfield, Kenneth D. & McCabe, Donald L., 1998. "The Ethical Context in Organizations: Influences on Employee Attitudes and Behaviors," Business Ethics Quarterly, Cambridge University Press, vol. 8(03), pages 447-476, July.
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    6. repec:wly:coacre:v:23:y:2006:i:3:p:761-787 is not listed on IDEAS
    7. Reynolds, J. Kenneth & Francis, Jere R., 2000. "Does size matter? The influence of large clients on office-level auditor reporting decisions," Journal of Accounting and Economics, Elsevier, vol. 30(3), pages 375-400, December.
    8. Gul, Ferdinand A. & Fung, Simon Yu Kit & Jaggi, Bikki, 2009. "Earnings quality: Some evidence on the role of auditor tenure and auditors' industry expertise," Journal of Accounting and Economics, Elsevier, vol. 47(3), pages 265-287, June.
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