Research On The Influence Of The Differences In The Background Characteristics Between Executives And Auditors On Audit Quality

In recent years,a large number of listed companies such as Xintai Electric and Yabaite have frequently committed financial fraud.The public have seriously questioned the audit quality of listed companies by accounting firms.How can we improve audit quality? Existed literatures on influcing factors are all researched from a holistic perspective while effects of individuals factors are needed to be studied.Further,most existed literatures treat the factors of audit subjects,objects,and the environment independently.However,these factors are not isolated.There are mutual influences.And the impact of their interaction on audit quality has yet to be studied.Therefore,it is necessary to study the impact of the differences in background characteristics of the executives and auditors of listed companies in China on audit quality on the basis of the relationship between the audit subject,the audit object and the audit environment from an individual perspective and further studies the differences between the two relationships under different legal environments and the effectiveness of the internal control system of the company,thus enriching and expanding the literature on audit quality.This paper firstly summarizes the high-level echelon theory,social comparison theory,behavioral finance theory and institutional theory,and then makes a theoretical analysis of the research problem and puts forward the research hypothesis.Secondly,research design is carried out.Taking all a-share listed companies from 2007 to 2017 as research objects,10207 sample observation values are collected,the research variables and their measures are determined and the corresponding model is constructed.Then,empirical analysis is carried out to verify the relationship between the differences in the background characteristics of executives and auditors and audit quality by using multiple regression analysis,further explores the impact of different legal environments and the effectiveness of the internal control system on the relationship between the two,and tests the robustness of the results.Finally,summarizes the research results and puts forward policy suggestions.Four conclusions are obtained through research:(1)The age difference between executives and auditors will have an impact on audit quality.Among them,the older of the chairman than the auditor will significantly lower the audit quality,and the older of the general manager than the auditor will significantly lower the audit quality.(2)Differences in academic qualifications between executives and auditors will affect audit quality.Among them,the higher education qualifications of the chairman than the auditor will significantly reduce the audit quality,and the higher education qualifications of the general manager than the auditor will reduce the audit quality,but it is not significant.(3)Different legal environments will have a certain impact on the relationship between the differences in background characteristics of executives and auditors and the quality of audits.Among them,the legal environment plays a significant negative role in regulating the impact of the age differences between the chairman and the auditor,and the differences in the educational background of the chairman and the auditor,on audit quality.(4)The effectiveness of different internal control systems will have a certain impact on the relationship between the differences in background characteristics of executives and auditors and the quality of audits.Among them,the effectiveness of internal control systems plays a significant negative role in regulating the impact of the age differences between the chairman and the auditor,the age differences between the general manager and the auditor,and the differences in the educational background of the chairman and the auditor,on audit quality.Aiming at these conclusions,corresponding suggestions are put forward for accounting firms,governments and companies.