Date: January 19, 2015

Time: 11:30am-13:30pm

Venue: Room 702, Administration Building, Zijingang Campus

Speaker: Assoc. Professor CHEN Jun

Topic: The Effect of Audit Quality on Stock Price Delay: Evidence from China

Abstract: We examine the effect of perceived audit quality on stock price delay and whether the effect differs for two groups of Chinese firms: state-owned enterprises (SOEs) and non-state-owned enterprises (NSOEs). Using a sample of 15,203 firm-year observations for Chinese listed firms over the period from 2001 to 2011, we find that firms with Big 4 auditors are associated with less stock price delay and this negative association is weaker for SOEs than for NSOEs. Our findings suggest that high-quality auditors play an important role in price formation process (in the form of less stock price delay), and this role varies across firms with different ownership structures. Our study contributes to prior research by focusing on the economic consequences of auditor choices and by emphasizing the importance of controlling for ownership type when conducting audit research.