Work

Auditor choice and accruals patterns of cross-listed firms

Year: 2011

Type: article

Abstract: We examine the association between auditor choice and the accruals patterns of Chinese listed firms that cross-list in Hong Kong. Our evidence suggests that the clients of Big 4 auditors report lower unsigned discretionary accruals relative to the clients of non-Big 4 auditors. Further, we find that cross-listed firms with non-Big 4 auditors are more likely to understate their earnings and experience larger reversals of accruals in the future than cross-listed firms with Big 4 auditors. These findings suggest that Big 4 auditors play a meaningful role in improving earnings quality for cross-listed firms, which helps to explain why cross-listed firms have higher earnings quality than their domestic counterparts, as documented in the previous literature.

Source: China Journal of Accounting Research

DOI: 10.1016/j.cjar.2011.09.002

Authors: Bing Wang, Qingquan Xin

Institutions: Nanjing University, Chongqing University

Language: English

Topic: Auditing, Earnings Management, Governance

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: gold

Estimated APC paid: $1,800

Funders: City University of Hong Kong, National Natural Science Foundation of China, Wuhan University, Nanjing University