Estimation and Interpretation of Individual Auditor's Effects on Audit Quality Measures: Evidence from China

47 Pages Posted: 5 Jan 2017

See all articles by Baolei Qi

Baolei Qi

Xi'an Jiaotong University (XJTU) - School of Management

Ping Zhang

University of Toronto - Rotman School of Management

Date Written: December 2016

Abstract

This study examines the validity of conclusions on individual auditor quality obtained using four audit measures with the archival data from China. We argue that for an audit quality measure to effectively identify an auditor’s quality, two conditions must be satisfied: The measure is directly linked to the quality of information audited by the auditor and the measured auditor effect is indeed caused by the auditor. We posit that the conclusion on an auditor’s quality based on an audit quality measure may not be reliable if these two conditions are not satisfied. We then provide empirical evidence that the audit quality estimation models in the extant literature do not provide coherent identifications of individual auditor’s quality. Our results imply that some or all of these models may not be well specified to measure auditor quality, suggesting improvements on these models are required. The empirical results in this paper also suggest that researchers need to exercise caution in interpreting the estimation results of the auditor quality from these existing models in the literature.

Keywords: Audit Quality; Individual Auditor Quality; Quality Measure

JEL Classification: M42

Suggested Citation

Qi, Baolei and Zhang, Ping, Estimation and Interpretation of Individual Auditor's Effects on Audit Quality Measures: Evidence from China (December 2016). 2017 Canadian Academic Accounting Association (CAAA) Annual Conference, Available at SSRN: https://ssrn.com/abstract=2893352 or http://dx.doi.org/10.2139/ssrn.2893352

Baolei Qi

Xi'an Jiaotong University (XJTU) - School of Management ( email )

28,Xianning West Road
Xi'an, Shaanxi 710049
China

Ping Zhang (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

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