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Beg your pardon? The effect of communication costs on audit quality

Author

Listed:
  • Yingwen Deng
  • Lu Xie
  • Min Zhang
  • Yaqian Wu

Abstract

We examine how language-induced communication costs affect audit quality by utilising unique data of signing auditors’ native dialects and audit adjustments in China during 2006–2011. The results show that greater language-induced communication costs lead to lower audit quality. We further find that the negative effect of communication costs on audit quality is mitigated by extended audit tenure. Our study introduces linguistics theory into auditing and is the first to investigate the empirical impact of language-related communication costs in the audit context.

Suggested Citation

  • Yingwen Deng & Lu Xie & Min Zhang & Yaqian Wu, 2021. "Beg your pardon? The effect of communication costs on audit quality," Accounting and Business Research, Taylor & Francis Journals, vol. 51(6-7), pages 824-851, November.
    • Handle: RePEc:taf:acctbr:v:51:y:2021:i:6-7:p:824-851
    DOI: 10.1080/00014788.2020.1748558
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    Cited by:

    1. Song, Jie & Liang, Shangkun & Zhen, Yuhan, 2023. "Does CEO-auditor dialect sharing affect stock price crash risk? Evidence from China," Finance Research Letters, Elsevier, vol. 57(C).

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