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A cross-cultural study of guanxi and auditor independence in two economies: evidence from China and the United States
Philip Law
2017-02-01
Source PublicationApplied Economics
ISSN0003-6846
Volume49Issue:6Pages:547-572
Abstract

This study examines the impact of guanxi on auditor independence in China and the U.S. Using panel data from 2012–2015 surveys, fixed-effects regression models are used to analyse survey data with observations drawn from a total of 1076 Big 4 and 1044 non-Big 4 auditor-years for Chinese auditors, and 1168 Big 4 and 1140 non-Big 4 auditor-years for the U.S. auditors. The results indicate that ‘guanxi with clients’ has a negative influence on perceptions of auditor independence for Chinese auditors, but not for the U.S. auditors. According to our findings, both groups agree that imposing regulations/code has a positive influence on perceptions of auditor independence. Gender has no influence on the perceived independence of either group. After controlling for social desirability bias, our results remain robust. Sensitivity analysis further increases the robustness of the findings. Our results provide empirical support for public interest theory and pose implications for Western multinational companies contemplating doing business in the Chinese economy. This investigation is particularly relevant in the wake of the rise of China as a global power. Regulators should consider the implications of this study when setting auditing guidelines and codes of ethics.

KeywordAuditor Independence Comparative Economy Culture Guanxi Public Interest Theory
DOIhttps://doi.org/10.1080/00036846.2016.1203059
URLView the original
Indexed BySSCI
Language英语
WOS Research AreaBusiness & Economics
WOS SubjectEconomics
WOS IDWOS:000388597100004
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Cited Times [WOS]:0   [WOS Record]     [Related Records in WOS]
Document TypeJournal article
CollectionDEPARTMENT OF ACCOUNTING AND INFORMATION MANAGEMENT
Corresponding AuthorPhilip Law
AffiliationDepartment of Accounting, Faculty of Business Administration, Avenida da Universidade, Taipa, University of Macau, Macau SAR, China
First Author AffilicationFaculty of Business Administration
Corresponding Author AffilicationFaculty of Business Administration
Recommended Citation
GB/T 7714
Philip Law. A cross-cultural study of guanxi and auditor independence in two economies: evidence from China and the United States[J]. Applied Economics,2017,49(6):547-572.
APA Philip Law.(2017).A cross-cultural study of guanxi and auditor independence in two economies: evidence from China and the United States.Applied Economics,49(6),547-572.
MLA Philip Law."A cross-cultural study of guanxi and auditor independence in two economies: evidence from China and the United States".Applied Economics 49.6(2017):547-572.
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