several audit partners in China who confirmed that the CFO typically is involved in client negotiations. We include numerous control variables in our analysis on prior research (e.g., Ashton et al. 1989; Ettredge et al. 2006; Whitworth and Lambert 2014). We expect auditor and client characteristics to impact the negotiation process and, in turn, audit delay. The variables are defined in Table 5 and summarized below. For the auditor, we include an indicator variable for Big 4 auditor (BIG). For client characteristics, we include the natural log of total assets (SIZE), growth in revenues (GROWTHR), the leverage ratio (LEV), the quick ratio (QUICK), inventory and receivables divided by total assets (INVREC), negative earnings (LOSS), foreign operations (FOREIGN), the natural log of firm age (FIRMAGE), the percentage of independent board directors (BOARDIND), the number of board meetings (BOARDMEET), and the percentage of shares held by the top ten shareholders (TOPSH). In addition, we control for year (YearIndicators) and industry (IndustryIndicators) fixed effects, and we adjust standard errors for clustering at the firm level. All continuous variables also are winsorized at the top and bottom one percent to avoid the impact of outliers. [Insert 5 about here.] Table 6 reports descriptive statistics for audit delay (LnLag and auditor and client SLag), narcissism (SIZEAUD1, and and other control variables. We observe SIZEAUD2, SIZECFO), that audit delay is, on average, 91.4 days. Inspection of Table 6 indicates that is SIZEAUD1 larger than suggesting that the review auditor’s narcissism exceeds that of the SIZEAUD2, engagement auditor. Moreover, and are larger than This SIZEAUD1 SIZEAUD2 SIZECFO. difference, however, is unlikely to be related to narcissism because, in general, more space is allotted for signatures in the auditor’s report than in the annual report.
several audit partners in China who confirmed that the CFO typically is involved in negotiations. We include numerous control variables in our analysis on prior research (e.g., Ashton et al. 1989; Ettredge et al. 2006; Whitworth and Lambert 2014). We expect auditor and client characteristics to impact the negotiation process and, in turn, audit delay. The variables are defined in Table 5 and summarized below. For the auditor, we include an indicator variable for Big 4 auditor (BIG). For client characteristics, we include the natural log of total assets (SIZE), growth in revenues (GROWTHR), the leverage ratio (LEV), the quick ratio (QUICK), inventory and receivables divided by total assets (INVREC), negative earnings (LOSS), foreign operations (FOREIGN), the natural log of firm age (FIRMAGE), the percentage of independent board directors (BOARDIND), the number of board meetings (BOARDMEET), and the percentage of shares held by the top ten shareholders (TOPSH). In addition, we control for year (YearIndicators) and industry (IndustryIndicators) fixed effects, and we adjust standard errors for clustering at the firm level. All continuous variables also are winsorized at the top and bottom one percent to avoid the impact of outliers. [Insert 5 about here.] Table 6 reports descriptive statistics for audit delay (LnLag and SLag), auditor and client narcissism (SIZEAUD1, SIZEAUD2, and SIZECFO), and other control variables. We observe that audit delay is, on average, 91.4 days. Inspection of Table 6 indicates that SIZEAUD1 is larger than SIZEAUD2, suggesting that the review auditor’s narcissism exceeds that of the engagement auditor. Moreover, SIZEAUD1 and SIZEAUD2 are larger than SIZECFO. This difference, however, is unlikely to be related to narcissism because, in general, more space is allotted for signatures in the auditor’s report than in the annual report. client
Auditor-Narcissism-Paper-10-6-2016.docx