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Does signing auditors’ communist party membership shape audit quality? Evidence from China

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Listed:
  • Fei Hou
  • Wenshuo Song
  • Lanlan Sun
  • Hao Xiong

Abstract

In this article, we investigate the effect of signing auditors’ communist party membership on audit quality. Relying on a sample of Chinese listed firms from the period 2001 to 2019, we find that firms with signing auditors who have communist party membership conduct less earnings management, indicating that signing auditors with party membership provide high level of audit quality. Moreover, the above relationship is more pronounced in small audit firms. We also find that firms who are audited by signing auditors with party status have lower likelihood of financial statements and loss avoidance. Further analyses suggest that signing auditors with party status can earn audit fee premium. The positive relationship between signing auditors with party membership and audit quality is more pronounced in non-specialists auditors and high client importance.

Suggested Citation

  • Fei Hou & Wenshuo Song & Lanlan Sun & Hao Xiong, 2023. "Does signing auditors’ communist party membership shape audit quality? Evidence from China," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 36(2), pages 2139740-213, July.
    • Handle: RePEc:taf:reroxx:v:36:y:2023:i:2:p:2139740
    DOI: 10.1080/1331677X.2022.2139740
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