Auditors' Signing Networks and Auditor Independence: Empirical Evidence from Going-Concern Opinions

Shiue, M. J., Yeh, S. L., and Chen, C. Y. 2021. Auditors' Signing Networks and Auditor Independence: Empirical Evidence from Going-Concern Opinions. NTU Management Review, 31 (3): 203-236. doi:10.6226/NTUMR.202112_31(3).0005

Min-Jeng Shiue, Department of Accountancy, National Taipei University
Shu-Ling Yeh, Department of Accountancy, National Taipei University
Ching-Yi Chen, Department of Accountancy, National Taipei University

Abstract

The purpose of this study is to examine the relationship between auditors' signing networks in CPA firms and improved/impaired auditor independence, where auditor independence is replaced by auditors' propensity to issue going-concern audit opinions. We use degree centrality as the main proxy for the strength of the relationship network which is computed by the number of co-signed auditors in the CPA firms. The sample consists of publicly traded firms identified as distressed and audited by the Big 4 audit firms in Taiwan during the 2006–2015 period. The empirical results show that auditors' degree centrality can be one of the key determinants of auditors issuing going-concern opinions. We also use betweenness centrality, closeness centrality, and eigenvector centrality to examine the relationship between auditors' signing networks and auditor independence. These sensitivity tests only partially support the aforementioned finding. 


Keywords

signing networksgoing-concern opinionindependence


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