This paper examines whether the scale advantage of auditing firms can be used as an alternative indicator of audit quality when the evaluation of audit quality is costly. The adoption of asset impairment recognition in China has brought about a considerable impact on financial reporting of...

Although forms of address are widely used in textual and other types of disclosure, empirical evidence of their effects is rare. China provides a unique setting in which to test the economic consequences of the forms of address used in audit reports. From 2003 to 2011, about 60% of auditors...

Previous research on whether the market responds to auditors' opinions has provided mixed results. We revisit this issue in China, where the stock market is dominated by individual investors who are more likely to neglect value-relevant information. In addition, China permits modified audit...

Analyzing hand-collected data on the corporate subsidiary locations of all publicly listed firms in China, we find that “hometown firms,” firms headquartered in the hometown of the key political leaders of the province, set up more subsidiaries in their home provinces. This effect is...

Although forms of address are widely used in textual and other types of disclosure, empirical evidence of their effects is rare. China provides a unique setting in which to test the economic consequences of the forms of address used in audit reports. From 2003 to 2011, about 60% of auditors...

We extend prior research by exploring the importance of social ties among auditors' clients to audit quality. On one hand, social ties foster communication among clients concerning how to deal with an auditor, helping clients negotiate against proposed audit adjustments. On the other hand,...