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Audit Quality for US‐listed Chinese Companies
Author(s) -
Dang Chien Minh,
Fargher Neil,
Lee Gladys
Publication year - 2017
Publication title -
international journal of auditing
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.583
H-Index - 21
eISSN - 1099-1123
pISSN - 1090-6738
DOI - 10.1111/ijau.12085
Subject(s) - accounting , business , audit , quality audit , audit evidence , accrual , joint audit , auditor independence , sample (material) , chief audit executive , quality (philosophy) , auditor's report , external auditor , walk through test , internal audit , earnings , philosophy , chemistry , epistemology , chromatography
PCAOB Staff Audit Practice Alert No. 6 raised concerns regarding the quality of audit reports on financial statements filed by issuers with substantially all of their operations outside of the US. An area of specific concern is the audit of companies with operations predominantly based in mainland China. Using a sample of Chinese companies listed in the US, we examine whether measures of audit quality are affected by the location of the auditor. We find some evidence of higher levels of discretionary accruals when a US‐listed Chinese firm is audited by a small US auditor.