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Auditors' identification with their clients: Effects on audit quality

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  • Svanberg, Jan
  • Öhman, Peter

Abstract

Although client familiarity is desirable from the auditor's perspective, identifying with clients threatens auditor objectivity. This study examines the extent to which non-Big 4 auditors identify with clients, the effect of auditor–client identification on auditors' client acquiescence to client-preferred treatment, and, finally, whether the harmful effects of auditor–client identification can be extended to a broader set of reduced audit quality acts. The responses of 141 practicing auditors at non-Big 4 firms in Sweden support our theoretical predictions. We find that auditors tend to identify with their clients, and that an auditor who identifies relatively more with a client is more likely to acquiesce to client-preferred treatment and to commit reduced audit quality acts. While previous research has considered only Big 4 firms, the current findings suggest that the problems with auditor identification with clients also hold for non-Big 4 auditors.

Suggested Citation

  • Svanberg, Jan & Öhman, Peter, 2015. "Auditors' identification with their clients: Effects on audit quality," The British Accounting Review, Elsevier, vol. 47(4), pages 395-408.
    • Handle: RePEc:eee:bracre:v:47:y:2015:i:4:p:395-408
    DOI: 10.1016/j.bar.2014.08.003
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    4. Astrid Rudyanto, 2017. "Audit Firm Reputation versus Auditor Capability: Their Effect on Audit Quality in Indonesia," GATR Journals afr147, Global Academy of Training and Research (GATR) Enterprise.
    5. Svanberg, Jan & Öhman, Peter & Neidermeyer, Presha E., 2019. "Auditor objectivity as a function of auditor negotiation self-efficacy beliefs," Advances in accounting, Elsevier, vol. 44(C), pages 121-131.
    6. Jan Svanberg & Peter Öhman, 2016. "Does Ethical Culture in Audit Firms Support Auditor Objectivity?," Accounting in Europe, Taylor & Francis Journals, vol. 13(1), pages 65-79, April.
    7. Luis Porcuna-Enguix & Elisabeth Bustos-Contell & José Serrano-Madrid & Gregorio Labatut-Serer, 2021. "Constructing the Audit Risk Assessment by the Audit Team Leader When Planning: Using Fuzzy Theory," Mathematics, MDPI, vol. 9(23), pages 1-22, November.
    8. Jones, Joanne & MacTavish, Carolyn & Schultz, Wendy, 2019. "The effect of gender and firm identification on auditor pre-negotiation judgments," Advances in accounting, Elsevier, vol. 44(C), pages 49-57.

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