Please use this identifier to cite or link to this item:
Title: Can auditors' local knowledge compensate for a weaker regulatory oversight for the audit quality of foreign companies?
Author(s): Chan, Koon Hung 
Author(s): Guo, Y.
Mo, P. L. L.
Issue Date: 2021
Publisher: Routledge
Journal: Accounting and Business Research 
Volume: 51
Issue: 2
Start page: 127
End page: 155
This study examines whether auditors’ local knowledge of clients can compensate for a weaker regulatory oversight in the audits of foreign companies. Based on a sample of Chinese companies that were listed in the U.S. and after controlling for other factors that may affect audit quality, we find that the audit quality of Hong Kong and Chinese non-Big 4 auditors is comparable to that of U.S. auditors with an affiliate in China and higher than that of U.S. auditors without a Chinese affiliate. Additional analysis indicates that U.S. auditors provide higher audit quality to U.S.-based listed firms than U.S.-listed Chinese firms and the quality difference is reduced for U.S. auditors with a Chinese affiliate. These results indicate that auditors’ local knowledge of foreign clients has a positive effect on audit quality and in certain circumstances, it can compensate for a weaker regulatory oversight in an international setting.
DOI: 10.1080/00014788.2020.1780109
CIHE Affiliated Publication: Yes
Appears in Collections:BHM Publication

SFX Query Show full item record

Google ScholarTM




Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.