Work or Life? Evidence of the Impact of Air Quality on Audit Delay and Audit Quality

35 Pages Posted: 22 Mar 2021

See all articles by Jiyuan Li

Jiyuan Li

Simon Fraser University

Yaqian Wu

Renmin University of China

Min Zhang

Renmin University of China

Date Written: March 22, 2021

Abstract

We investigate the impact of air quality on audit process and audit outcomes using samples from the Chinese capital market between 2013 and 2018. We find that client firms located in cities with worse air quality have shorter audit delay and lower audit quality, represented by a lower probability of and fewer audit adjustments. Further analyses show that auditors from Big 4 audit firms can mitigate the effect of air quality on audit delay and audit quality. Our study contributes to the emerging literature on behavioral finance by extending the research into ambient air pollution to the auditing context, and provides new insights into the determinants of audit delay and audit quality.

Keywords: Air Quality, Audit Delay, Audit Quality

JEL Classification: M42, Q5

Suggested Citation

Li, Jiyuan and Wu, Yaqian and Zhang, Min, Work or Life? Evidence of the Impact of Air Quality on Audit Delay and Audit Quality (March 22, 2021). Available at SSRN: https://ssrn.com/abstract=3809635 or http://dx.doi.org/10.2139/ssrn.3809635

Jiyuan Li (Contact Author)

Simon Fraser University ( email )

8888 University Drive
Burnaby, British Colombia V5A 1S6
Canada

Yaqian Wu

Renmin University of China ( email )

Room B906
Xianjin Building
Beijing, Beijing 100872
China

Min Zhang

Renmin University of China ( email )

School of Business,Renmin University of China
Beijing, Beijing 100872
China

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