Does trust matter in external audits? The role of audit committee chair’s trust in external audits
ISSN: 0268-6902
Article publication date: 9 November 2023
Issue publication date: 15 January 2024
Abstract
Purpose
This study aims to investigate the impact of the audit committee chair’s trust on the quality of interactions between the external auditor and the audit committee chair in Hong Kong.
Design/methodology/approach
The research uses a questionnaire survey to gather data from the audit committee chairs of the listed companies in Hong Kong, with a response rate of 19.2%. Partial least squares structural equation modelling is used in this study.
Findings
The results reveal that the audit committee chair’s trust in the external auditor’s competence, integrity and goodwill is an important determinant of the interaction quality. The findings also show that interaction quality during the pre-engagement stage is important to mediate the relationships between the three dimensions of trust and interaction quality during the audit performance stage.
Originality/value
This is the first study, to the best of the author’s knowledge, that examines the impact of the audit committee chair’s trust in the external auditor on the quality of their interactions. The findings provide insights for board of directors, auditors and policymakers to implement policies that enhance trust between them to improve audit quality.
Keywords
Acknowledgements
The authors are very grateful to the reviewers for their helpful contributions. Their comments and suggestions have further enriched the work.
Funding: This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.
Citation
Cheung, K.Y. and Lai, C.Y. (2024), "Does trust matter in external audits? The role of audit committee chair’s trust in external audits", Managerial Auditing Journal, Vol. 39 No. 1, pp. 1-25. https://doi.org/10.1108/MAJ-10-2022-3737
Publisher
:Emerald Publishing Limited
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