{"title":"Auditors’ Religious Beliefs and Audit Quality: Some Evidence from Taiwan","authors":"Rong-Ruey Duh, F. Gul, A. Hsu","doi":"10.1142/s1094406022500135","DOIUrl":null,"url":null,"abstract":"Synopsis The research problem Adding to the literature in auditing, this study examines whether there is an association between the religious beliefs of audit partners and audit quality in Taiwan. Motivation Previous studies have found that firms headquartered in areas with strong religious social norms are associated with higher audit quality. However, prior studies measured religiosity in terms of whether the audit practice offices were in more religious metropolitan statistical areas. No work had examined whether the religious beliefs of the individual auditors affect auditor decision making. In addition, prior studies using US data were mainly confined to one group who are, in the main, Christians. We examined this issue in Taiwan where the auditors come from three main religious groups: Christian, Buddhist, and Taoist. This setting provides another cultural environment for understanding the links between religiosity and financial reporting issues. The test hypotheses [Formula: see text]: Audit engagement partners with a religious belief are associated with higher audit quality. [Formula: see text]: The positive association between auditors’ religion and audit quality is more pronounced for auditors with industry specialization than auditors without specialization. Target population Various stakeholders include investors, auditors, financial analysts, and users of financial reports. Adopted methodology Ordinary least squares (OLS) regression and logistics regression. Analyses We conducted the study in Taiwan where audit partners are required to sign audit reports. We obtained data on the religious beliefs of auditors by distributing a questionnaire to individual auditors in the Big 4 in Taiwan. We used four measures of audit quality: (a) discretionary accruals, (b) accrual estimation errors, (c) the probability of a client meeting an earnings benchmark, and (d) the propensity to issue modified audit opinions. We tested whether there is a positive association between auditors’ religious beliefs and audit quality. Findings Our study finds that firms with an audit partner who professes a religion are associated with higher audit quality. However, unlike evidence from the United States, we do not find that auditors in an area with strong religious social norms exhibit better audit quality than auditors in less religious areas when the audit partner’s religious belief is controlled in the analysis. The results suggest that auditor quality is more affected by auditor’s personal characteristics than the social norms. We also find that the positive association between auditors with industry specialization and audit quality is stronger when the auditor has religious beliefs. The results suggest that ethics and competence are complements to each other.","PeriodicalId":47122,"journal":{"name":"International Journal of Accounting","volume":null,"pages":null},"PeriodicalIF":2.0000,"publicationDate":"2022-07-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"1","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Journal of Accounting","FirstCategoryId":"1085","ListUrlMain":"https://doi.org/10.1142/s1094406022500135","RegionNum":0,"RegionCategory":null,"ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 1
Abstract
Synopsis The research problem Adding to the literature in auditing, this study examines whether there is an association between the religious beliefs of audit partners and audit quality in Taiwan. Motivation Previous studies have found that firms headquartered in areas with strong religious social norms are associated with higher audit quality. However, prior studies measured religiosity in terms of whether the audit practice offices were in more religious metropolitan statistical areas. No work had examined whether the religious beliefs of the individual auditors affect auditor decision making. In addition, prior studies using US data were mainly confined to one group who are, in the main, Christians. We examined this issue in Taiwan where the auditors come from three main religious groups: Christian, Buddhist, and Taoist. This setting provides another cultural environment for understanding the links between religiosity and financial reporting issues. The test hypotheses [Formula: see text]: Audit engagement partners with a religious belief are associated with higher audit quality. [Formula: see text]: The positive association between auditors’ religion and audit quality is more pronounced for auditors with industry specialization than auditors without specialization. Target population Various stakeholders include investors, auditors, financial analysts, and users of financial reports. Adopted methodology Ordinary least squares (OLS) regression and logistics regression. Analyses We conducted the study in Taiwan where audit partners are required to sign audit reports. We obtained data on the religious beliefs of auditors by distributing a questionnaire to individual auditors in the Big 4 in Taiwan. We used four measures of audit quality: (a) discretionary accruals, (b) accrual estimation errors, (c) the probability of a client meeting an earnings benchmark, and (d) the propensity to issue modified audit opinions. We tested whether there is a positive association between auditors’ religious beliefs and audit quality. Findings Our study finds that firms with an audit partner who professes a religion are associated with higher audit quality. However, unlike evidence from the United States, we do not find that auditors in an area with strong religious social norms exhibit better audit quality than auditors in less religious areas when the audit partner’s religious belief is controlled in the analysis. The results suggest that auditor quality is more affected by auditor’s personal characteristics than the social norms. We also find that the positive association between auditors with industry specialization and audit quality is stronger when the auditor has religious beliefs. The results suggest that ethics and competence are complements to each other.
期刊介绍:
The aim of The International Journal of Accounting is to advance the academic and professional understanding of accounting theory, policies and practice from the international perspective and viewpoint. The Journal editorial recognizes that international accounting is influenced by a variety of forces, e.g., governmental, political and economic. Thus, the primary criterion for manuscript evaluation is the incremental contribution to international accounting literature and the forces that impact the field. The Journal aims at understanding the present and potential ability of accounting to aid in analyzing and interpreting international economic transactions and the economic consequences of such reporting. These transactions may be within a profit or non-profit environment. The Journal encourages a broad view of the origins and development of accounting with an emphasis on its functions in an increasingly interdependent global economy. The Journal also welcomes manuscripts that help explain current international accounting practices, with related theoretical justifications, and identify criticisms of current policies and practice. Other than occasional commissioned papers or special issues, all the manuscripts published in the Journal are selected by the editors after the normal double-blind refereeing process.