An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Chee W. Chow
San Diego State University

Joanna L. Ho
University of California - Irvine

Phyllis Lai Lan Mo
The Hong Kong Polytechnic University

Abstract: This exploratory study seeks insights into determinants of Chinese audit firms' ability to ensure high quality financial reporting. Its scope of investigation encompasses the extent to which Chinese audit firms employ structured audit processes, their evaluation of potential clients, as well as factors that impact their risk assessment and the stringency of the reporting standards to which they hold clients. The factors investigated include ones suggested as being important by extant research, as well as unique characteristics of the Chinese setting (e.g., the importance of interpersonal relationships ("guanxi")and most listed companies' origins as state-owned-enterprises). Structured interviews and questionnaire surveys are used to solicit quantitative and open-ended responses from 102 Chinese auditors at the partner, manager and senior levels of Big-4 affiliates and local public accounting firms.

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