Research On Auditors' Narcissism And Audit Quality

Audit quality is the survival of the firm,has been widely concerned by the theoretical and practical circles.More and more literatures begin to explore the influence of individual auditor characteristics on audit quality.Psychological research shows that an individual's personality has an important effect on his behavior.Among them,narcissism,as a basic personality trait,is prevalent in social groups.This paper selects the audit and financial data of A-share listed companies in Shanghai and Shenzhen stock exchanges from 2009 to 2016.Based on behavioral finance theory and upper echelons theory,we investigate the effect of one of the auditor's individual characteristics,narcissism,on audit quality.The signature size of the signed auditor on the audit report is used to measure the narcissistic characteristics of the auditor.Firstly,we examine the influence of the signature auditor's narcissistic characteristics on the audit quality.Secondly,the mediating effect of auditor busyness on the relationship between auditor narcissism and audit quality was discussed.Finally,this paper discusses whether there are differences in the influence of signature auditor narcissism on audit quality between the big four accounting firms and non-big four accounting firms.Our main findings show that:1)The fixed effect of individual auditor is significant.The more narcissistic the signatory auditor,the greater the absolute value of the auditee's discretionary accruals,the greater the likelihood of financial statement restatement,the more likely it is to be issued with a standard audit opinion;2)The higher the degree of narcissism of the signing auditor,the higher the busyness of the signing auditor,resulting in lower audit quality.And the mediating effect of auditor busyness was more pronounced when auditor-client tenure was short;3)The influence of narcissism on audit quality is not restricted by accounting firms,that is,there was no significant difference in the effect of auditors' narcissism characteristics on audit quality between the big four accounting firms and non-big four accounting firms.