The Effect of Guanxi on Audit Quality in China

Journal of Business Ethics 103 (4):621-638 (2011)
Two types of guanxi have a close association with auditor independence in China: firm-level connections derived from state ownership and personal connections developed through management affiliations with external auditors. This article examines the effects of these two types of connection and their joint effect on audit quality. We find that state ownership and management affiliations with the external auditor both increase the probability of receiving a clean audit opinion in China. Furthermore, the probability increment brought by management affiliations for non-state-owned enterprises (NSOEs) is greater than that for state-owned enterprises (SOEs). These results suggest that state ownership and management affiliations are two important types of connection that impair auditor independence, and that management affiliations are of greater importance to private-sector firms than to SOEs
Keywords guanxi  auditor independence  corporate governance  state ownership  business ethics  China
Categories (categorize this paper)
DOI 10.1007/s10551-011-0884-z
 Save to my reading list
Follow the author(s)
My bibliography
Export citation
Find it on Scholar
Edit this record
Mark as duplicate
Revision history
Request removal from index
Download options
Our Archive

Upload a copy of this paper     Check publisher's policy     Papers currently archived: 25,687
Through your library
References found in this work BETA

Add more references

Citations of this work BETA

Add more citations

Similar books and articles
Enhancing Perceptions of Auditor Independence.Michael A. Pearson - 1985 - Journal of Business Ethics 4 (1):53 - 56.
Guanxi and OCB: The Chinese Cases. [REVIEW]Liang-Hung Lin & Yu-Ling Ho - 2010 - Journal of Business Ethics 96 (2):285 - 298.
Auditor Professionalism.Marietta Peytcheva & Danielle E. Warren - 2011 - Business and Professional Ethics Journal 30 (1-2):33-57.

Monthly downloads

Added to index


Total downloads

17 ( #273,980 of 2,146,203 )

Recent downloads (6 months)

2 ( #280,490 of 2,146,203 )

How can I increase my downloads?

My notes
Sign in to use this feature

There  are no threads in this forum
Nothing in this forum yet.

Other forums