IDEAS home Printed from https://ideas.repec.org/p/sek/ibmpro/2304228.html
   My bibliography  Save this paper

The Influence of Partners? Views on Chinese Auditors? Judgments Related to Professional Scepticism

Author

Listed:
  • Sammy Xiaoyan Ying

    (Macquarie University)

  • Chris Patel

    (Macquarie University)

Abstract

Professional scepticism remains one of the most important and controversial topics in auditing. This study examines the influence of partners? views on auditors? professional scepticism in China. This examination is important given the hierarchical structures of audit firms, and even more important in China given the strong cultural emphasis on subordination and obedience. Specifically, this study invokes social contingency theory to provide insights into partner influences on auditors from an accountability perspective. It is expected that auditors with knowledge of partners? views are likely to be susceptible to pressure to align their judgments to the partners? views, and such pressure influences auditors? professional scepticism when exercising judgments. A between-subjects experiment was conducted with practicing auditors in China. The independent variable, partners? views on professional scepticism, was manipulated across three groups: (1) a control group, in which there is no information about partners? view, (2) a group in which partners? known views reflect low emphasis on professional scepticism, or (3) a group in which partners? known views reflect high emphasis on professional scepticism. The results provide evidence that when partners? views on professional scepticism are known, auditors perceive considerable amount of pressure to follow the partners? views. Further, the results show that when partners? views reflect low emphasis on professional scepticism, auditors? levels of professional scepticism are significantly lower compared to when partners? views are unknown. However, when partners? views reflect high emphasis on professional scepticism, auditors? levels of PS do not significantly differ from when partners? views are unknown. Furthermore, the results show that when auditors learn partners? views, increased intensity of perceived pressure can strengthen the effects of partners? influences on auditors? professional scepticism. The findings of this study have important implications for auditing regulators, professionals, and audit firms.

Suggested Citation

  • Sammy Xiaoyan Ying & Chris Patel, 2015. "The Influence of Partners? Views on Chinese Auditors? Judgments Related to Professional Scepticism," Proceedings of Business and Management Conferences 2304228, International Institute of Social and Economic Sciences.
  • Handle: RePEc:sek:ibmpro:2304228
    as

    Download full text from publisher

    File URL: https://iises.net/proceedings/business-management-conference-vienna/table-of-content/detail?cid=23&iid=023&rid=4228
    File Function: First version, 2015
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Wang, Kun & O, Sewon & Claiborne, M. Cathy, 2008. "Determinants and consequences of voluntary disclosure in an emerging market: Evidence from China," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 17(1), pages 14-30.
    2. Chen, Charles J.P. & Su, Xijia & Wu, Xi, 2007. "Market competitiveness and Big 5 pricing: Evidence from China's binary market," The International Journal of Accounting, Elsevier, vol. 42(1), pages 1-24.
    3. Pentland, Brian T., 1993. "Getting comfortable with the numbers: Auditing and the micro-production of macro-order," Accounting, Organizations and Society, Elsevier, vol. 18(7-8), pages 605-620.
    4. Harrison, Graeme L. & McKinnon, Jill L., 1999. "Cross-cultural research in management control systems design: a review of the current state," Accounting, Organizations and Society, Elsevier, vol. 24(5-6), pages 483-506, July.
    5. Peng, Mike W. & Lu, Yuan & Shenkar, Oded & Wang, Denis Y. L., 2001. "Treasures in the China house: a review of management and organizational research on Greater China," Journal of Business Research, Elsevier, vol. 52(2), pages 95-110, May.
    6. Dirsmith, Mark W. & Haskins, Mark E., 1991. "Inherent risk assessment and audit firm technology: A contrast in world theories," Accounting, Organizations and Society, Elsevier, vol. 16(1), pages 61-90.
    7. DeZoort, Todd & Harrison, Paul & Taylor, Mark, 2006. "Accountability and auditors' materiality judgments: The effects of differential pressure strength on conservatism, variability, and effort," Accounting, Organizations and Society, Elsevier, vol. 31(4-5), pages 373-390.
    8. Hopwood, Anthony G., 1983. "On trying to study accounting in the contexts in which it operates," Accounting, Organizations and Society, Elsevier, vol. 8(2-3), pages 287-305, May.
    9. Heidhues, Eva & Patel, Chris, 2011. "A critique of Gray's framework on accounting values using Germany as a case study," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 22(3), pages 273-287.
    10. Peecher, ME, 1996. "The influence of auditors' justification processes on their decisions: A cognitive model and experimental evidence," Journal of Accounting Research, Wiley Blackwell, vol. 34(1), pages 125-140.
    11. Meiling Wong, 2010. "Guanxi Management as Complex Adaptive Systems: a Case Study of Taiwanese ODI in China," Journal of Business Ethics, Springer, vol. 91(3), pages 419-432, February.
    12. Power, Michael K., 2003. "Auditing and the production of legitimacy," Accounting, Organizations and Society, Elsevier, vol. 28(4), pages 379-394, May.
    13. Lord, Alan T. & Todd DeZoort, F., 2001. "The impact of commitment and moral reasoning on auditors' responses to social influence pressure," Accounting, Organizations and Society, Elsevier, vol. 26(3), pages 215-235, April.
    14. Karen L Newman & Stanley D Nollen, 1996. "Culture and Congruence: The Fit Between Management Practices and national Culture," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 27(4), pages 753-779, December.
    15. Jihong Liu & Yaping Wang & Liansheng Wu, 2011. "The Effect of Guanxi on Audit Quality in China," Journal of Business Ethics, Springer, vol. 103(4), pages 621-638, November.
    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. Cieslewicz, Joshua K., 2014. "Relationships between national economic culture, institutions, and accounting: Implications for IFRS," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 25(6), pages 511-528.
    2. Curtis, Emer & Turley, Stuart, 2007. "The business risk audit - A longitudinal case study of an audit engagement," Accounting, Organizations and Society, Elsevier, vol. 32(4-5), pages 439-461.
    3. repec:dau:papers:123456789/7549 is not listed on IDEAS
    4. Guénin-Paracini, Henri & Malsch, Bertrand & Paillé, Anne Marché, 2014. "Fear and risk in the audit process," Accounting, Organizations and Society, Elsevier, vol. 39(4), pages 264-288.
    5. Mohammad Hudaib & Roszaini Haniffa, 2009. "Exploring auditor independence: an interpretive approach," Accounting, Auditing & Accountability Journal, Emerald Group Publishing, vol. 22(2), pages 221-246, January.
    6. Namrata Malhotra & Timothy Morris, 2009. "Heterogeneity in Professional Service Firms," Journal of Management Studies, Wiley Blackwell, vol. 46(6), pages 895-922, September.
    7. Vassili Joannides & Danture Wickramasinghe & Nicolas Berland, 2012. "Critiques on gray-hofstede’s model: what impact on cross-cultural accounting research?," Post-Print hal-01661667, HAL.
    8. Kang, Yoon Ju & Trotman, Andrew J. & Trotman, Ken T., 2015. "The effect of an Audit Judgment Rule on audit committee members’ professional skepticism: The case of accounting estimates," Accounting, Organizations and Society, Elsevier, vol. 46(C), pages 59-76.
    9. Power, Michael K., 2003. "Auditing and the production of legitimacy," Accounting, Organizations and Society, Elsevier, vol. 28(4), pages 379-394, May.
    10. Ruhnke, Klaus & Schmitz, Stefanie, 2019. "Review engagements – structure of audit firm methodology and its situational application in Germany," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 37(C).
    11. Hongjuan Zhang & Liang Wang & Rong Han, 2019. "The China-West divide on social capital: A meta-analysis," Asia Pacific Journal of Management, Springer, vol. 36(3), pages 745-772, September.
    12. Koch, Christopher & Weber, Martin & Wüstemann, Jens, 2007. "Can auditors be independent? : Experimental evidence," Papers 07-59, Sonderforschungsbreich 504.
    13. Paula Jarzabkowski & Sarah Kaplan, 2015. "Strategy tools-in-use: A framework for understanding “technologies of rationality” in practice," Strategic Management Journal, Wiley Blackwell, vol. 36(4), pages 537-558, April.
    14. Dunne, Neil J. & Brennan, Niamh M. & Kirwan, Collette E., 2021. "Impression management and Big Four auditors: Scrutiny at a public inquiry," Accounting, Organizations and Society, Elsevier, vol. 88(C).
    15. Pernilla Broberg & Torbjörn Tagesson & Daniela Argento & Niclas Gyllengahm & Ola Mårtensson, 2017. "Explaining the influence of time budget pressure on audit quality in Sweden," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 21(2), pages 331-350, June.
    16. Nicholls, Alex, 2009. "'We do good things, don't we?': 'Blended Value Accounting' in social entrepreneurship," Accounting, Organizations and Society, Elsevier, vol. 34(6-7), pages 755-769, August.
    17. Peecher, Mark E. & Solomon, Ira & Trotman, Ken T., 2013. "An accountability framework for financial statement auditors and related research questions," Accounting, Organizations and Society, Elsevier, vol. 38(8), pages 596-620.
    18. Nicholls, Alex, 2010. "Institutionalizing social entrepreneurship in regulatory space: Reporting and disclosure by community interest companies," Accounting, Organizations and Society, Elsevier, vol. 35(4), pages 394-415, May.
    19. Bonner, Sarah E. & Sprinkle, Geoffrey B., 2002. "The effects of monetary incentives on effort and task performance: theories, evidence, and a framework for research," Accounting, Organizations and Society, Elsevier, vol. 27(4-5), pages 303-345.
    20. Malsch, Bertrand & Gendron, Yves, 2009. "Mythical representations of trust in auditors and the preservation of social order in the financial community," CRITICAL PERSPECTIVES ON ACCOUNTING, Elsevier, vol. 20(6), pages 735-750.
    21. Jorgensen, Bjorn N. & Morley, Julia, 2017. "Discussion of “are related party transactions red flags?”," LSE Research Online Documents on Economics 80801, London School of Economics and Political Science, LSE Library.

    More about this item

    Keywords

    Professional Scepticism; Auditing; China; Partner influences;
    All these keywords.

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    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:sek:ibmpro:2304228. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://iises.net/ .

    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: Klara Cermakova (email available below). General contact details of provider: https://iises.net/ .

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.