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Does ethical culture in audit firms support auditor objectivity?
Department of Business, Economics and Law, Centre for Research on Economic Relations, Mid Sweden University, Sundsvall, Sweden.
Department of Business, Economics and Law, Centre for Research on Economic Relations, Mid Sweden University, Sundsvall, Sweden.
2016 (English)In: Accounting in Europe, ISSN 1744-9480, E-ISSN 1744-9499, Vol. 13, no 1, 65-79 p.Article in journal (Refereed) Published
Abstract [en]

The suggested cause of constrained auditor objectivity has been centred on auditors' financial incentives and long audit tenure. Recent research has challenged those assumptions and questioned the effectiveness of auditor rotation to counteract short-tenure threats to auditor objectivity. Audit firms and regulators need to adopt methods for enhancing auditor objectivity that are effective in various auditor–client relationships. This study examines whether audit firm ethical culture is positively related to auditor objectivity. Based on the responses of 281 practising auditors, the findings indicate that auditors are more likely to make objective judgments in ethical cultures characterized by the rewarding of ethical behaviour and punishment of unethical behaviour, prevalence of ethical norms, visible ethical leadership, and low emphasis on obedience to authority. In conclusion, evidence indicates that auditors in audit firms with a strong ethical culture are more likely to maintain auditor objectivity than are auditors in less supportive cultures. This suggests that audit firms should promote a strong ethical culture to reduce the risk of constrained auditor judgment.

Place, publisher, year, edition, pages
2016. Vol. 13, no 1, 65-79 p.
Keyword [en]
auditor objectivity, audit firm, ethical culture
National Category
Business Administration
Identifiers
URN: urn:nbn:se:hig:diva-23089DOI: 10.1080/17449480.2016.1164324ISI: 000387227800004Scopus ID: 2-s2.0-84961671479OAI: oai:DiVA.org:hig-23089DiVA: diva2:1061368
Available from: 2016-04-25 Created: 2016-12-16 Last updated: 2017-01-05Bibliographically approved

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard-cite-them-right
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • sv-SE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • de-DE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf