Chinese Studies public lecture

January 23, 12:00pm - 1:30pm
Mānoa Campus, Tokioka Room (Moore Hall 319) Add to Calendar

Friday, January 23, 12:00 noon

Tokioka Room (Moore Hall 319)

“Business Group Importance and Audit Quality: Evidence from China”

ZHOU Jian, School of Accountancy, UHM

This paper investigates the relationship between client importance at the business group level (business group importance) and audit quality. Business group importance is calculated as the sum of audit fees for a specific auditor from companies in a business group divided by the total revenues of the auditor. We find that business group importance is positively related to performance matched discretionary accruals. We also find that business group importance does not affect audit quality of large audit firms, while it affects audit quality of small audit firms. Furthermore, business group importance affects audit quality of non-industry specialists, while it does not affect audit quality of industry specialists. For the heterogeneity of business groups, we find that business group importance is related to audit quality only when member companies in the same business group are in different industries. In sum, we find that the more important the business group to an auditor, the lower the audit quality.

Jian Zhou is a professor of Accounting at UHM, where he holds the Lloyd Fujie/Deloitte Foundation Distinguished Professorship. His current research focuses on auditing related issues such as internal control and audit committee. He has published in many journals, such as Contemporary Accounting Research, Journal of Accounting, Auditing and Finance, Journal of Accounting and Public Policy, Auditing: A Journal of Practice and Theory and Accounting Horizons. His research has been featured in the Wall Street Journal and SmartMoney, and has been referenced in leading textbooks, such as Financial Accounting Theory; and has been cited by a SEC study and in a joint letter to the U.S. Congress from the Center for Audit Quality, the Council for Institutional Investors, and CFA Institute. Zhou has won many research grants, such as the PricewaterhouseCoopers INQuires Grant (2007, 2008, 2011). Zhou has presented papers at AAA FARS mid-year meeting, ISAR Symposium, Conference on Financial Economics and Accounting, and CRSP Forum at University of Chicago. Zhou currently sits on the Editorial Board of Auditing: A Journal of Practice and Theory, and received the journal’s 2014 Outstanding Service Award.


Event Sponsor
Center for Chinese Studies and Confucius Institute at UHM, Mānoa Campus

More Information
(808) 956-8891, china@hawaii.edu

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