TY - JOUR
T1 - The Importance of Partner Narcissism to Audit Quality
T2 - Evidence from Taiwan
AU - Chou, Ting Kai
AU - Pittman, Jeffrey A.
AU - Zhuang, Zili
N1 - Funding Information:
We appreciate Michael Willenborg (editor) for his valuable insights and guidance throughout the review process. We are also grateful for constructive comments from two anonymous reviewers, Vincent Chen, Jong Hag Choi, Matthew Cobabe, Matthew Erickson, Jonathan Glover, Kevin Hale, Hua-Wei Huang, Pepa Kraft, Brad Lawson (discussant), Yu-Chen Lin, Ling Lisic, Ke Na, Marlene Plumlee, Sarah Stein, Guochang Zhang, and seminar participants at the Central South University, The Chinese University of Hong Kong, Jilin University, National Cheng Kung University, National Chung Cheng University, National Taipei University, The University of Hong Kong, Virginia Polytechnic Institute and State University, and Xi’an Jiaotong University. Our paper has also benefited from insights from participants at the 2018 American Accounting Association Annual Meeting, the 2018 Sixth International Conference of the Journal of International Accounting Research, the 2018 Journal of Accounting, Auditing and Finance Conference, and the 9th International Conference of the Japanese Accounting Review. Ting-Kai Chou acknowledges financial support from the Ministry of Science and Technology of Taiwan (MOST 106-2410-H-006-016-MY2).
Publisher Copyright:
© 2022 American Accounting Association. All rights reserved.
PY - 2022/4
Y1 - 2022/4
N2 - Relying on the size of partner signatures in audit reports in Taiwan to measure their narcissism, we find that audit quality rises with partner narcissism. Our analysis also implies that changes in audit quality are positively associated with changes in partner narcissism stemming from mandatory partner rotation. We also find that the impact of partner narcissism on audit quality only manifests when auditor independence is more likely to be compromised, although it does not vary with engagement complexity. These results suggest that partner narcissism improves audit quality mainly through increased auditor independence, rather than auditor competence. Additionally, we document that although partner narcissism has no perceptible impact on the incidence of Type I going concern reporting errors, it is negatively associated with the probability of making a Type II error, implying that more narcissistic partners are less likely to succumb to client pressure to issue opportunistic reports.
AB - Relying on the size of partner signatures in audit reports in Taiwan to measure their narcissism, we find that audit quality rises with partner narcissism. Our analysis also implies that changes in audit quality are positively associated with changes in partner narcissism stemming from mandatory partner rotation. We also find that the impact of partner narcissism on audit quality only manifests when auditor independence is more likely to be compromised, although it does not vary with engagement complexity. These results suggest that partner narcissism improves audit quality mainly through increased auditor independence, rather than auditor competence. Additionally, we document that although partner narcissism has no perceptible impact on the incidence of Type I going concern reporting errors, it is negatively associated with the probability of making a Type II error, implying that more narcissistic partners are less likely to succumb to client pressure to issue opportunistic reports.
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U2 - 10.2308/TAR-2018-0420
DO - 10.2308/TAR-2018-0420
M3 - Article
AN - SCOPUS:85122073013
VL - 96
SP - 103
EP - 127
JO - Accounting Review
JF - Accounting Review
SN - 0001-4826
IS - 6
ER -