Does rice farming shape audit quality: Evidence from signing auditors level analysis |
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| Institution: | 1. School of Accounting, Guizhou University of Finance and Economics, Guiyang, 550025, Guizhou province, China;2. School of Business, Qingdao University, Qingdao, 266071, Shandong province, China;3. School of Big Data Applicationg and Economics, Guizhou University of Finance and Economics, Guiyang, 550025, Guizhou province, China;1. Department of Management, Università Politecnica delle Marche, Ancona, Italy;2. Department of Economics and Social Science, Università Politecnica delle Marche, Ancona, Italy;1. Department of Financial Engineering, Ajou University, Suwon, 16499, Republic of Korea;2. Department of Applied Mathematics & Institute of Natural Science, Kyung Hee University, Yongin, 17104, Republic of Korea;3. Department of Mathematical Sciences, Seoul National University, Seoul, 08826, Republic of Korea;1. Texas A&M University, Department of Finance, Mays Business School, College Station, TX, 77843, USA;2. University of Valladolid (Spain), NRU Higher School of Economics (Russia), School of Business and Economics, Avda. Valle Del Esgueva 6, 47011, Valladolid, Spain;3. University of Valladolid, School of Business and Economics, Avda. Valle Del Esgueva 6, 47011, Valladolid, Spain;1. Graduate School of Economics, Kobe University, 2-1 Rokko-dai, Nada, Kobe, 657-8501, Japan;2. Institute of Social and Economic Research, Osaka University, 6-1, Mihogaoka, Ibaraki, Osaka, 567-0047, Japan |
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| Abstract: | This study examines whether signing auditors from rice planting regions affect audit quality. Using a sample of 12,223 firm-year observations from the Chinese stock market over the period of 2004–2015, our findings reveal that signing auditors from rice regions are significantly negatively associated with the likelihood of unclean audit opinions, suggesting that signing auditors with rice culture are more likely to succumb to the managers and hamper independence, and thus are more inclined to issue favorable audit opinions, and eventually impair audit quality. Furthermore, audit firm size and industry expertise attenuate the negative relation between signing auditors with rice culture and audit quality. In addition, above findings are robust to a variety of sensitivity tests using different measures of audit quality and signing auditors from rice cultivating areas and our conclusions still stand after using the Heckman two-step approach, placebo test and differences-in-differences method to address the potential endogeneity problem. |
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| Keywords: | Signing auditors Rice planting regions Audit firm size Audit firm industry specialization Audit quality |
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