Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/187630 
Authors: 
Year of Publication: 
2014
Citation: 
[Journal:] China Journal of Accounting Research [ISSN:] 1755-3091 [Volume:] 7 [Issue:] 4 [Publisher:] Elsevier [Place:] Amsterdam [Year:] 2014 [Pages:] 247-261
Publisher: 
Elsevier, Amsterdam
Abstract: 
Although forms of address are widely used in textual and other types of disclosure, empirical evidence of their effects is rare. China provides a unique setting in which to test the economic consequences of the forms of address used in audit reports. From 2003 to 2011, about 60% of auditors surveyed addressed their clients by their real names in audit opinions, while the others used honorifics. Based on a sample of Chinese audit opinions, I report the following findings. First, the announcement of an audit opinion that uses the client's real name elicits a greater market response than the announcement of an opinion featuring an honorific form of address. Second, the effects of real-name forms of address are stronger in firms with weak board governance. Third, the association between audit fees and audit risk factors, such as loss-making, is stronger in firms that are addressed by their real names in audit reports. I conclude from these findings that the forms of address used in audit opinions may reveal private information on audit quality. The results of this study are consistent with the power-solidarity effect described by sociolinguists.
Subjects: 
Address forms
Audit independence
Power-solidarity effect
Politeness principle
JEL: 
G11
L20
M42
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article

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