Author ORCID Identifier
Date Available
5-10-2025
Year of Publication
2023
Degree Name
Doctor of Philosophy (PhD)
Document Type
Doctoral Dissertation
College
Business and Economics
Department/School/Program
Accountancy
First Advisor
Brian Bratten
Second Advisor
Monika Causholli
Abstract
This dissertation explores the audit consequences of social ties across audit offices. Although recent studies have demonstrated the importance of auditors’ social ties in auditor performance, little is known about the role of social ties across audit offices in facilitating knowledge sharing within audit firms and their impact on audit quality. To fill this gap, this study employs the Facebook Social Connectedness Index to capture social ties across audit offices within the same audit firm. Drawing upon the organizational learning literature and social network literature, I predict and find that audit office-level social ties improve audit quality. In addition, the proportion of social ties to offices with greater expertise or better connections is positively associated with audit quality.
Based on the organizational learning framework, I examine whether economic mechanisms of knowledge searching and sharing can explain the positive impact of social ties on audit quality. I find that results are driven by offices that are more likely to engage in knowledge searching because they lack expertise, such as those with only one client in a given industry or small offices. Furthermore, the results are more pronounced during non-busy season when auditors are more available to share knowledge. These findings confirm the existence of knowledge searching and sharing channels.
Furthermore, I explore the nature of knowledge auditors could share through their social ties across offices. I find that social ties across offices are less likely to yield benefits in highly complex situations where auditors face challenging audit tasks such as dealing with revenue recognition, goodwill impairments, and multi-location operation audits. Hence, auditors tend to derive more benefit from their social ties with other offices when seeking simple knowledge, rather than complex knowledge.
After subjecting the results to a battery of robustness tests—including a reexamination in an international setting, the use of alternative measures for social ties connectedness and audit quality, control for auditing costs, and the utilization of PSM and entropy balancing methods—the findings remain consistent. This study contributes to the emerging research that highlights the advantages of social ties by demonstrating their usefulness in the highly regulated and specialized auditing industry. This finding is particularly important given the recent shift towards remote work, which has made effective communication and collaboration more challenging than ever before.
Digital Object Identifier (DOI)
https://doi.org/10.13023/etd.2023.188
Recommended Citation
Li, Wenyin, "SOCIAL TIES ACROSS AUDIT OFFICES AND AUDIT QUALITY" (2023). Theses and Dissertations--Accountancy. 21.
https://uknowledge.uky.edu/accountancy_etds/21
