Auditors’ self-assessment of engagement quality and the role of stakeholder priority

Figures & data

Table 1: Descriptive Statistics.

Panel A: Distribution of overall audit quality (OAQ) and (reversed) audit quality threatening behaviours (AQTB1r-AQTB8r)

	OAQ	AQTB1r	AQTB2r	AQTB3r	AQTB4r	AQTB5r	AQTB6r	AQTB7r	AQTB8r
1	0	1	6	0	1	1	1	1	1
2	6	11	14	5	5	18	16	16	10
3	31	38	33	22	20	52	39	50	23
4	143	135	110	106	107	132	140	128	126
5	71	66	88	118	118	48	55	56	91
Sum	251	251	251	251	251	251	251	251	251

Panel B: Descriptive statistics of dependent, test and control variables
	Mean	SD	Min	p5	p25	p50	p75	p95	Max
OAQ	4.11	0.7	2	3	4	4	5	5	5
AQTBr_All	4.07	0.55	2.13	3	3.88	4	4.5	5	5
AQTBr_Client	3.88	0.67	2	2.67	3.67	4	4.33	5	5
AQTBr_Others	4.18	0.56	2	3.2	4	4.2	4.6	5	5
OAQ_AQTBr	0.04	0.72	−1.88	−1	−0.38	0	0.5	1.25	1.88
Female	0.44	0.5	0	0	0	0	1	1	1
Partner	0.29	0.45	0	0	0	0	1	1	1
Manager	0.39	0.49	0	0	0	0	1	1	1
HigherEducation	0.94	0.24	0	0	1	1	1	1	1
EngExperience	4.67	5.47	0	1	2	3	5	15	25
N	251

Panel C: Distribution of auditors’ stakeholder priorities
	Main sample			Full sample
	0	1	Total	0	1	Total
PriorityClient	172	79	251	232	103	335
PriorityEmployer	228	23	251	303	32	335
PriorityShareholder	230	21	251	303	32	335
PriorityRegulator	239	12	251	319	16	335
PrioritySociety	243	8	251	324	11	335
PrioritySelf	232	19	251	308	27	335
PriorityOthers	162	89	251	221	114	335

Panel D: Correlation Matrix
		1	2	3	4	5	6	7	8	9	10	11	12
1	PriorityClient	1
2	PriorityEmployer	−0.22#	1
3	PriorityShareholder	−0.20#	−0.1	1
4	PrioritySociety	−0.12*	−0.06	−0.05	1
5	PriorityRegulator	−0.15*	−0.07	−0.07	−0.04	1
6	PrioritySelf	−0.19#	−0.09	−0.09	−0.05	−0.06	1
7	PriorityOthers	−0.50#	−0.24#	−0.22#	−0.13*	−0.17#	−0.21#	1
8	Female	0.02	0.05	−0.07	−0.07	0.06	−0.1	0.04	1
9	Partner	−0.07	0.01	0.03	0.19#	−0.02	−0.08	0.03	−0.12*	1
10	Manager	0.09	0	0.05	−0.1	−0.03	−0.14*	0.00	−0.01	−0.51#	1
11	HigherEducation	−0.02	−0.04	−0.05	0.04	−0.03	0.07	0.03	0.04	0.04	−0.02	1
12	EngExperience	−0.03	0.01	−0.01	−0.01	−0.05	0.04	0.04	−0.04	0.18#	−0.07	−0.01	1

This table presents various statistics of the dependent, test, and control variables. Panel A reports the distribution of the overall audit quality (OAQ) and the eight reversed individual audit quality threatening behaviours (AQTB1r-AQTB8r). Panel B reports the descriptive statistics of the dependent, test and control variables. Panel C reports the distribution of auditors’ different stakeholder priorities. Panel D reports the correlation matrix between auditors’ stakeholder priorities and control variables. * (#) indicates significance at the 5% (1%) level. All the variables are defined in Appendix 1.

Table 2: Main results for RQ1

Panel A: Regress OAQ on AQTBr_All, AQTBr_Client and AQTBr_Others and control variables using team fixed effects.

	(1)	(2)	(3)
	OAQ	OAQ	OAQ
AQTBr_All	1.692***
	(4.21)
AQTBr_Client		1.243***
		(3.68)
AQTBr_Others			1.529***
			(4.02)
Female	−0.654	−0.565	−0.653
	(−1.49)	(−1.30)	(−1.50)
Partner	1.582***	1.515***	1.611***
	(3.01)	(2.93)	(3.07)
Manager	0.947**	1.016**	0.857*
	(2.05)	(2.20)	(1.88)
HigherEducation	−0.505	−0.820	−0.361
	(−0.54)	(−0.87)	(−0.38)
EngExperience	0.071	0.080*	0.061
	(1.49)	(1.65)	(1.39)
N	251	251	251
Pseudo R^2	0.410	0.402	0.406

Panel B: Regress OAQ on AQTB1r-AQTB4r and control variables using team fixed effects.
	(1)	(2)	(3)	(4)
	OAQ	OAQ	OAQ	OAQ
AQTB1r	1.067***
	(3.93)
AQTB2r		0.368*
		(1.75)
AQTB3r			1.239***
			(4.01)
AQTB4r				0.711**
				(2.56)
Female	−0.451	−0.424	−0.603	−0.686
	(−1.05)	(−0.99)	(−1.40)	(−1.56)
Partner	1.788***	1.515***	1.730***	1.221**
	(3.37)	(2.96)	(3.32)	(2.40)
Manager	0.805*	0.903**	0.813*	0.759*
	(1.78)	(2.02)	(1.78)	(1.71)
HigherEducation	−0.735	−0.433	−0.815	−0.301
	(−0.77)	(−0.46)	(−0.85)	(−0.32)
EngExperience	0.063	0.068	0.057	0.072*
	(1.38)	(1.60)	(1.35)	(1.76)
N	251	251	251	251
Pseudo R^2	0.405	0.379	0.407	0.386

Panel C: Regress OAQ on AQTB5r-AQTB8r and control variables using team fixed effects.
	(1)	(2)	(3)	(4)
	OAQ	OAQ	OAQ	OAQ
AQTB5r	0.433*
	(1.77)
AQTB6r		1.118***
		(3.96)
AQTB7r			0.721***
			(2.90)
AQTB8r				0.515**
				(2.13)
Female	−0.483	−0.628	−0.403	−0.495
	(−1.12)	(−1.45)	(−0.94)	(−1.15)
Partner	1.572***	1.293**	1.445***	1.445***
	(3.06)	(2.48)	(2.85)	(2.87)
Manager	0.880**	0.951**	0.944**	0.782*
	(1.98)	(2.09)	(2.07)	(1.77)
HigherEducation	−1.077	−0.623	−0.255	−0.645
	(−1.12)	(−0.65)	(−0.27)	(−0.68)
EngExperience	0.066	0.106**	0.070	0.066*
	(1.52)	(2.00)	(1.64)	(1.66)
N	251	251	251	251
Pseudo R^2	0.379	0.407	0.390	0.382

This table presents the results of regressing overall audit quality (OAQ) on the average reversed AQTBs (AQTBr_All), client-related AQTBs (AQTBr_Client) and other types of AQTBs (AQTBr_Others), and each of the eight individual reversed AQTBs (AQTB1r-AQTB8r), respectively. All the variables are defined in Appendix 1. We use ordered logistic regression and use team fixed effects in all the analyses in this table. The z-statistics are reported in parentheses. *, **, and *** denote significance at the 10%, 5%, and 1% levels, respectively.

Table 3: Main results for RQ2

Panel A: Regress AQTBr_All, AQTBr_Client, AQTBr_Others, and OAQ on auditor priority -variables and control variables using team fixed effects. Benchmark is the group of auditors indicating ‘regulators’ as the highest priority.

	(1)	(2)	(3)	(4)
	AQTBr_All	AQTBr_Client	AQTBr_Others	OAQ
PriorityClient	−1.048	−2.481***	0.141	−0.950
	(−1.45)	(−3.22)	(0.20)	(−1.00)
PriorityEmployer	−2.585***	−3.159***	−1.724**	−0.404
	(−3.15)	(−3.64)	(−2.08)	(−0.37)
PriorityShareholder	−0.917	−1.981**	0.074	−0.756
	(−1.07)	(−2.14)	(0.08)	(−0.66)
PrioritySociety	0.106	−0.175	0.197	−1.541
	(0.10)	(−0.16)	(0.18)	(−1.16)
PrioritySelf	−0.798	−1.754*	−0.124	0.877
	(−0.92)	(−1.92)	(−0.14)	(0.77)
PriorityOthers	−1.287*	−2.322***	−0.298	0.105
	(−1.73)	(−2.91)	(−0.40)	(0.11)
Female	0.605*	0.622*	0.531	−0.398
	(1.72)	(1.71)	(1.50)	(−0.89)
Partner	−0.246	−0.175	−0.190	1.630***
	(−0.63)	(−0.43)	(−0.47)	(3.10)
Manager	−0.067	−0.187	0.048	1.052**
	(−0.18)	(−0.50)	(0.13)	(2.19)
HigherEducation	−0.263	0.325	−0.420	−1.198
	(−0.35)	(0.42)	(−0.58)	(−1.22)
EngExperience	0.005	−0.025	0.035	0.072*
	(0.13)	(−0.60)	(1.04)	(1.72)
N	251	251	251	251
Pseudo R^2	0.119	0.172	0.129	0.389

Panel B: Regress individual AQTBs (AQTB1r-AQTB4r) on auditor priority -variables and control variables using team fixed effects. Benchmark is the group of auditors indicating ‘regulators’ as the highest priority.
	(1)	(2)	(3)	(4)
	AQTB1r	AQTB2r	AQTB3r	AQTB4r
PriorityClient	−1.822**	0.956	−0.586	1.512
	(−1.98)	(1.15)	(−0.54)	(1.50)
PriorityEmployer	−3.783***	−0.768	−1.516	−1.336
	(−3.68)	(−0.80)	(−1.36)	(−1.24)
PriorityShareholder	0.665	−0.706	−1.977	1.204
	(0.61)	(−0.71)	(−1.58)	(0.98)
PrioritySociety	0.912	−0.155	−0.837	−1.484
	(0.69)	(−0.11)	(−0.60)	(−0.93)
PrioritySelf	−1.274	−0.102	−1.240	0.037
	(−1.16)	(−0.10)	(−1.03)	(0.03)
PriorityOthers	−1.428	0.110	−1.155	−0.714
	(−1.50)	(0.13)	(−1.06)	(−0.68)
Female	0.246	0.359	0.501	1.394***
	(0.60)	(0.93)	(1.14)	(3.06)
Partner	−1.104**	−0.602	−0.758	2.176***
	(−2.25)	(−1.32)	(−1.51)	(3.85)
Manager	−0.148	−0.435	0.509	0.445
	(−0.34)	(−1.00)	(1.11)	(0.93)
HigherEducation	−0.207	−0.788	0.741	−2.063**
	(−0.25)	(−0.96)	(0.77)	(−2.00)
EngExperience	0.078**	0.039	0.062	−0.006
	(2.00)	(1.14)	(1.43)	(−0.15)
N	251	251	251	251
Pseudo R^2	0.313	0.244	0.336	0.351

Panel C: Regress individual AQTBs (AQTB5r-AQTB8r) on auditor priority -variables and control variables using team fixed effects. Benchmark is the group of auditors indicating ‘regulators’ as highest priority.
	(1)	(2)	(3)	(4)
	AQTB5r	AQTB6r	AQTB7r	AQTB8r
PriorityClient	−2.016**	−2.965***	−1.660*	−0.058
	(−2.08)	(−3.29)	(−1.92)	(−0.06)
PriorityEmployer	−2.038**	−4.219***	−2.856***	−0.914
	(−1.98)	(−4.20)	(−2.97)	(−0.87)
PriorityShareholder	−0.899	−1.953*	−2.330**	0.564
	(−0.80)	(−1.82)	(−2.23)	(0.51)
PrioritySociety	2.277	−1.432	−1.789	−0.522
	(1.64)	(−1.00)	(−1.43)	(−0.39)
PrioritySelf	−1.253	−2.315**	−1.323	−0.461
	(−1.15)	(−2.20)	(−1.28)	(−0.41)
PriorityOthers	−1.350	−2.615***	−2.002**	−0.750
	(−1.35)	(−2.79)	(−2.22)	(−0.77)
Female	0.732*	0.619	−0.086	0.049
	(1.87)	(1.56)	(−0.22)	(0.13)
Partner	−1.422***	0.589	0.058	0.262
	(−3.11)	(1.25)	(0.13)	(0.56)
Manager	−0.211	−0.029	−0.423	0.418
	(−0.50)	(−0.07)	(−1.03)	(1.03)
HigherEducation	3.039***	−0.190	−1.672*	1.086
	(3.56)	(−0.22)	(−1.91)	(1.22)
EngExperience	0.025	−0.077	0.007	0.015
	(0.65)	(−1.64)	(0.19)	(0.41)
N	251	251	251	251
Pseudo R^2	0.270	0.279	0.264	0.242

This table presents the results of regressing AQTBs (AQTBr_All, AQTBr_Client, AQTBr_Others and eight individual AQTBs), and OAQ on auditor priority -variables and control variables. Benchmark is the group of auditors indicating ‘regulators’ as the highest priority. All the variables are defined in Appendix 1. We use ordered logistic regression and use team fixed effects in all the analyses in this table. The z-statistics are reported in parentheses. *, **, and *** denote significance at the 10%, 5%, and 1% levels, respectively.

Table 4: Main results for RQ3

	(1) Total sample	(2) OAQ_AQTBr≥0	(3) OAQ_AQTBr≤0
	OAQ_AQTBr	OAQ_AQTBr	OAQ_AQTBr
PriorityClient	0.021	0.564***	−0.290
	(0.07)	(2.74)	(−1.37)
PriorityEmployer	0.441	0.650***	−0.003
	(1.39)	(3.10)	(−0.01)
PriorityShareholder	−0.017	0.489**	−0.506**
	(−0.05)	(2.04)	(−2.00)
PrioritySociety	−0.253	0.196	−0.237
	(−0.59)	(0.60)	(−0.84)
PrioritySelf	0.392	0.397	0.026
	(1.15)	(1.63)	(0.09)
PriorityOthers	0.297	0.468**	0.113
	(1.00)	(2.22)	(0.48)
Female	−0.202	−0.252***	−0.052
	(−1.59)	(−2.78)	(−0.57)
Partner	0.394***	0.028	0.419***
	(2.62)	(0.27)	(3.93)
Manager	0.256*	0.105	0.167*
	(1.87)	(1.06)	(1.75)
HigherEducation	−0.161	−0.379	−0.222
	(−0.58)	(−1.60)	(−1.00)
EngExperience	0.007	−0.002	0.004
	(0.62)	(−0.32)	(0.58)
Constant	0.135	0.966***	−0.909***
	(0.31)	(3.13)	(−2.90)
N	251	159	144
Adj. R^2	0.073	0.005	0.025

This table presents the results of regressing the difference between overall audit quality (OAQ) and the average reversed AQTBs (OAQ_AQTBr) on auditors’ stakeholder priorities and control variables. All the variables are defined in Appendix 1. We use OLS regression in column (1), and truncated OLS in columns (2) and (3), and include team fixed effects in all the analyses in this table. The t-statistics are reported in parentheses. *, **, and *** denote significance at the 10%, 5%, and 1% levels, respectively.

Table 5: Additional tests for RQ1 – different ranks

Panel A: Descriptive statistics for client characteristics

	N	Mean	SD	p5	p25	p50	p75	p95
LnTA	101	14	2	10.89	12.64	14.11	15.44	17.41
Public	101	0.24	0.43	0	0	0	0	1
Leverage	101	0.57	0.26	0.09	0.36	0.62	0.76	0.93
SalesGrowth	101	0.18	1.14	−0.26	0	0.02	0.12	0.47
ROA	101	0.04	0.17	−0.18	0	0.04	0.1	0.25
Tenure	101	12.6	5.06	4	9	13	17	19

Panel B: RQ1 for different ranks
	(1)	(2)	(3)	(4)
	Total sample OAQ	Sample of partners OAQ	Sample of managers OAQ	Sample of associates OAQ
AQTBr_All	1.225***	1.443***	1.054***	1.407***
	(5.48)	(3.09)	(2.98)	(3.45)
Female	0.154	0.166	0.147	0.296
	(0.67)	(0.35)	(0.40)	(0.69)
Partner	0.884***
	(2.92)
Manager	0.513*
	(1.91)
HigherEducation	0.269	1.275	−1.053	1.085
	(0.53)	(1.21)	(−1.34)	(1.25)
EngExperience	0.052**	0.069	0.033	0.077*
	(2.01)	(1.40)	(0.59)	(1.69)
LnTA	0.053	0.103	0.029	0.139
	(0.84)	(0.76)	(0.30)	(1.01)
Public	0.143	0.407	−0.062	−0.101
	(0.50)	(0.65)	(−0.14)	(−0.18)
Leverage	0.225	0.439	−0.394	0.767
	(0.59)	(0.48)	(−0.77)	(0.84)
SalesGrowth	−0.130	1.017	−0.069	−0.201
	(−1.14)	(1.48)	(−0.41)	(−1.29)
ROA	0.737	2.285	−0.294	1.496
	(1.21)	(1.54)	(−0.32)	(1.36)
Tenure	0.055**	0.015	0.063*	0.064
	(2.37)	(0.31)	(1.68)	(1.53)
N	335	98	130	106
Pseudo R^2	0.091	0.116	0.064	0.128

Panel A reports the descriptive statistics of client characteristics. Panel B presents the results of regressing overall audit quality (OAQ) on the average reversed AQTBs (AQTBr_All) and control variables for auditors in different ranks. We use the full sample of 335 observations. We first present the results for the full sample (column 1) before we report the results for the partner rank, manager rank, and associate rank, respectively, in the last three columns. All the variables are defined in Appendix 1. We use ordered logistic regression in all the analyses in this table. The z-statistics are reported in parentheses. *, **, and *** denote significance at the 10%, 5%, and 1% levels, respectively.

Table 6: Additional tests for RQ2 – different ranks

Panel A: AQTBr_All is the dependent variable

	(1)	(2)	(3)	(4)
	Total sample AQTBr_All	Sample of partners AQTBr_All	Sample of managers AQTBr_All	Sample of associates AQTBr_All
PriorityClient	−0.143	−0.415	−0.033	−0.222
	(−0.97)	(−1.34)	(−0.12)	(−0.92)
PriorityEmployer	−0.327*	−0.793**	−0.276	−0.048
	(−1.95)	(−2.28)	(−0.94)	(−0.17)
PriorityShareholder	−0.078	−0.164	−0.061	−0.154
	(−0.46)	(−0.49)	(−0.20)	(−0.50)
PrioritySociety	−0.197	−0.588	0.464	−0.474
	(−0.91)	(−1.65)	(1.02)	(−1.00)
PrioritySelf	−0.128	−0.635*	0.388	−0.154
	(−0.74)	(−1.72)	(1.05)	(−0.60)
PriorityOthers	−0.158	−0.392	−0.066	−0.093
	(−1.08)	(−1.30)	(−0.24)	(−0.40)
Female	0.160**	0.066	0.164	0.329***
	(2.57)	(0.58)	(1.58)	(2.65)
Partner	0.012
	(0.15)
Manager	0.015
	(0.20)
HigherEducation	−0.037	−0.261	−0.129	0.325
	(−0.28)	(−1.15)	(−0.61)	(1.21)
EngExperience	0.005	−0.007	0.034**	0.006
	(0.86)	(−0.58)	(2.18)	(0.67)
LnTA	−0.030*	−0.057*	−0.012	−0.066*
	(−1.73)	(−1.81)	(−0.44)	(−1.70)
Public	0.098	0.168	0.112	0.044
	(1.25)	(1.14)	(0.90)	(0.26)
Leverage	0.078	0.144	0.088	0.087
	(0.77)	(0.66)	(0.63)	(0.31)
SalesGrowth	0.046	0.030	0.034	0.057
	(1.33)	(0.19)	(0.68)	(1.00)
ROA	0.092	−0.045	0.180	0.280
	(0.55)	(−0.13)	(0.66)	(0.87)
Tenure	0.001	−0.002	0.000	−0.001
	(0.19)	(−0.21)	(0.00)	(−0.10)
Constant	4.479***	5.463***	4.108***	4.569***
	(14.48)	(9.51)	(8.46)	(7.29)
N	335	98	130	106
Adj. R^2	0.008	0.018	−0.002	0.003

Panel B: OAQ is the dependent variable
	(1)	(2)	(3)	(4)
	Total sample OAQ	Sample of partners OAQ	Sample of managers OAQ	Sample of associates OAQ
PriorityClient	−0.129	1.400	−0.889	−0.065
	(−0.24)	(1.07)	(−0.93)	(−0.07)
PriorityEmployer	0.105	1.586	−1.297	0.619
	(0.17)	(1.09)	(−1.21)	(0.63)
PriorityShareholder	−0.155	2.162	−1.336	−0.985
	(−0.25)	(1.53)	(−1.23)	(−0.94)
PrioritySociety	0.179	0.702	0.390	1.538
	(0.23)	(0.47)	(0.24)	(0.94)
PrioritySelf	0.052	3.733**	−1.935	−0.335
	(0.08)	(2.20)	(−1.42)	(−0.37)
PriorityOthers	−0.089	0.928	−0.801	0.146
	(−0.17)	(0.73)	(−0.83)	(0.17)
Female	0.329	0.391	0.227	0.560
	(1.43)	(0.80)	(0.60)	(1.29)
Partner	0.797***
	(2.63)
Manager	0.497*
	(1.83)
HigherEducation	0.163	0.801	−0.988	1.489*
	(0.33)	(0.79)	(−1.25)	(1.65)
EngExperience	0.055**	0.077	0.070	0.089*
	(2.25)	(1.43)	(1.17)	(1.95)
LnTA	0.018	0.039	0.053	0.038
	(0.27)	(0.29)	(0.52)	(0.27)
Public	0.264	0.702	0.058	−0.256
	(0.92)	(1.14)	(0.13)	(−0.45)
Leverage	0.259	0.863	−0.469	0.827
	(0.67)	(0.92)	(−0.90)	(0.86)
SalesGrowth	−0.079	1.094	−0.010	−0.033
	(−0.69)	(1.48)	(−0.06)	(−0.20)
ROA	0.814	2.413	−0.706	1.562
	(1.34)	(1.64)	(−0.73)	(1.41)
Tenure	0.050**	0.021	0.069*	0.040
	(2.18)	(0.42)	(1.81)	(0.94)
N	335	98	130	106
Pseudo R^2	0.045	0.117	0.043	0.091

This table presents the results of regressing the average reversed AQTBs (AQTBr_All), and overall audit quality (OAQ), respectively, on auditors’ stakeholder priorities and control variables for auditors in different ranks. We use the full sample of 335 observations. We first present the results for the full sample (column 1) before we report the results for the partner rank, manager rank, and associate rank, respectively, in the last three columns. All the variables are defined in Appendix 1. We use OLS regressions for Panel A and ordered logistic regression for Panel B. The z-statistics are reported in parentheses. *, **, and *** denote significance at the 10%, 5%, and 1% levels, respectively.

Table 7: Additional tests for RQ3 – different ranks

	(1)	(2)	(3)	(4)
	Total sample OAQ_AQTBr	Sample of partners OAQ_AQTBr	Sample of managers OAQ_AQTBr	Sample of associates OAQ_AQTBr
PriorityClient	0.082	0.763**	−0.255	0.121
	(0.42)	(2.03)	(−0.68)	(0.38)
PriorityEmployer	0.311	1.209***	−0.190	0.223
	(1.39)	(2.85)	(−0.46)	(0.60)
PriorityShareholder	0.009	0.721*	−0.339	−0.225
	(0.04)	(1.77)	(−0.82)	(−0.55)
PrioritySociety	0.280	0.840*	−0.319	0.871
	(0.97)	(1.94)	(−0.51)	(1.38)
PrioritySelf	0.119	1.527***	−0.994*	0.047
	(0.51)	(3.40)	(−1.95)	(0.14)
PriorityOthers	0.125	0.619*	−0.195	0.169
	(0.64)	(1.69)	(−0.52)	(0.54)
Female	−0.028	0.035	−0.071	−0.103
	(−0.34)	(0.25)	(−0.49)	(−0.63)
Partner	0.300***
	(2.79)
Manager	0.176*
	(1.82)
HigherEducation	0.085	0.449	−0.169	0.153
	(0.49)	(1.62)	(−0.58)	(0.43)
EngExperience	0.011	0.025	−0.010	0.016
	(1.40)	(1.61)	(−0.48)	(1.38)
LnTA	0.033	0.070*	0.029	0.054
	(1.44)	(1.82)	(0.77)	(1.05)
Public	−0.004	0.006	−0.108	−0.059
	(−0.03)	(0.03)	(−0.63)	(−0.26)
Leverage	0.007	0.059	−0.226	0.168
	(0.05)	(0.22)	(−1.18)	(0.45)
SalesGrowth	−0.070	0.215	−0.036	−0.081
	(−1.52)	(1.08)	(−0.52)	(−1.07)
ROA	0.222	0.615	−0.364	0.440
	(1.01)	(1.48)	(−0.97)	(1.03)
Tenure	0.017**	0.007	0.022	0.020
	(2.03)	(0.51)	(1.55)	(1.22)
Constant	−1.040**	−2.297***	0.033	−1.494*
	(−2.53)	(−3.29)	(0.05)	(−1.80)
N	335	98	130	106
Adj. R^2	0.050	0.165	−0.038	0.008

This table presents the results of regressing the difference between overall audit quality (OAQ) and the average reversed AQTBs (OAQ_AQTBr) on auditors’ stakeholder priorities and control variables for auditors in different ranks. We use the full sample of 335 observations. We first present the results for the full sample (column 1) before we report the results for the partner rank, manager rank, and associate rank, respectively, in the last three columns. All the variables are defined in Appendix 1. We use OLS regression in all the analyses in this table. The t-statistics are reported in parentheses. *, **, and *** denote significance at the 10%, 5%, and 1% levels, respectively.

Table 8: Additional tests - the moderating effect of the second highest stakeholder priority

	(1)	(2)	(3)
	AQTBr_All	OAQ	OAQ_AQTBr
PriorityClient_User	1.969***	1.365*	−0.960*
	(3.26)	(1.72)	(−1.68)
PriorityEmployer_User	−0.011	−2.027	−0.446
	(−0.01)	(−1.29)	(−0.31)
PriorityClient	−2.076***	−1.559	0.366
	(−2.60)	(−1.47)	(0.44)
PriorityEmployer	−2.660***	0.099	1.300
	(−3.01)	(0.08)	(1.42)
PriorityShareholder	−0.977	−0.662	−0.530
	(−1.11)	(−0.57)	(−0.56)
PrioritySociety	0.235	−1.405	−1.292
	(0.22)	(−1.05)	(−1.03)
PrioritySelf	−0.863	1.008	1.197
	(−0.97)	(0.87)	(1.28)
PriorityOthers	−1.461*	0.194	0.829
	(−1.91)	(0.19)	(1.03)
Female	0.598*	−0.527	−0.607*
	(1.71)	(−1.17)	(−1.80)
Partner	−0.221	1.691***	1.438***
	(−0.56)	(3.21)	(3.68)
Manager	−0.074	1.006**	0.978***
	(−0.20)	(2.05)	(2.66)
HigherEducation	0.541	−0.787	−0.661
	(0.67)	(−0.78)	(−0.87)
EngExperience	−0.005	0.059	0.032
	(−0.13)	(1.37)	(1.08)
N	251	251	251
Pseudo R^2	0.127	0.398	0.121

This table presents the results of regressing AQTBr_All, OAQ, and the OAQ_AQTBr (difference between OAQ and AQTBr_All) on auditors’ stakeholder priorities and control variables. We interact PriorityClient and PriorityEmployer with SecondPriorityUser, and construct two interaction terms PriorityClient_User and PriorityEmployer_User. SecondPriorityUser is equal to 1 if the second highest priority is users of financial statements (i.e. shareholders, regulators or wider society). We use ordered logistic regression and include team fixed effects in all the analyses in this table. The z-statistics are reported in parentheses. *, **, and *** denote significance at the 10%, 5%, and 1% levels, respectively.

Table

OAQ	=	Overall Audit Quality based on the question ‘Relative to your other engagements with similar client characteristics, how would you rate the overall audit quality of this engagement, from 1 (low) to 5 (high)?’
AQTB1	=	The extent audit team members reduce the amount of work performed on an audit step below a reasonable level, where 1 (5) indicates never (always).
AQTB2	=	The extent audit team members under-report audit time, where 1 (5) indicates never (always).
AQTB3	=	The extent audit team members sign off an audit-program step without completing the work or noting the omission, where 1 (5) indicates never (always).
AQTB4	=	The extent audit team members make an unauthorised reduction of sample size, where 1 (5) indicates never (always).
AQTB5	=	The extent audit team members have a greater than appropriate reliance on client work, where 1 (5) indicates never (always).
AQTB6	=	The extent audit team members accept weak client explanations, where 1 (5) indicates never (always).
AQTB7	=	The extent audit team members make superficial reviews of client documents, where 1 (5) indicates never (always).
AQTB8	=	The extent audit team members fail to investigate an accounting principle, where 1 (5) indicates never (always).
AQTB1r	=	Reversed AQTB1, where AQTB1r = 1, 2, 4, and 5, if AQTB1 = 5, 4, 2, and 1, respectively.
AQTB2r	=	Reversed AQTB2, where AQTB2r = 1, 2, 4, and 5, if AQTB2 = 5, 4, 2, and 1, respectively.
AQTB3r	=	Reversed AQTB3, where AQTB3r = 1, 2, 4, and 5, if AQTB3 = 5, 4, 2, and 1, respectively.
AQTB4r	=	Reversed AQTB4, where AQTB4r = 1, 2, 4, and 5, if AQTB4 = 5, 4, 2, and 1, respectively.
AQTB5r	=	Reversed AQTB5, where AQTB5r = 1, 2, 4, and 5, if AQTB5 = 5, 4, 2, and 1, respectively.
AQTB6r	=	Reversed AQTB6, where AQTB6r = 1, 2, 4, and 5, if AQTB6 = 5, 4, 2, and 1, respectively.
AQTB7r	=	Reversed AQTB7, where AQTB7r = 1, 2, 4, and 5, if AQTB7 = 5, 4, 2, and 1, respectively.
AQTB8r	=	Reversed AQTB8, where AQTB8r = 1, 2, 4, and 5, if AQTB8 = 5, 4, 2, and 1, respectively.
AQTBr_All	=	The mean value of the (reversed) responses to the eight questions about AQTBs
AQTBr_Client	=	The mean value of the (reversed) responses to the questions about AQTBs that are related to audit clients
AQTBr_Others	=	The mean value of the (reversed) responses to the questions about AQTBs that are not related to audit clients
OAQ_AQTBr	=	The difference between OAQ and reversed AQTB_All
PriorityClient	=	An indicator variable, which equals 1 if the auditor considers the audit client as the highest priority, and 0 otherwise.
PriorityEmployer	=	An indicator variable, which equals 1 if the auditor considers audit firm, audit office or audit team as the highest priority, and 0 otherwise.
PriorityShareholder	=	An indicator variable, which equals 1 if the auditor considers the shareholders as the highest priority, and 0 otherwise.
PrioritySociety	=	An indicator variable, which equals 1 if the auditor considers the wider society as the highest priority, and 0 otherwise.
PriorityRegulator	=	An indicator variable, which equals 1 if the auditor considers the regulators as the highest priority, and 0 otherwise.
PrioritySelf	=	An indicator variable, which equals 1 if the auditor considers herself as the highest priority, and 0 otherwise.
PriorityOthers	=	An indicator variable, which equals 1 if the auditor considers others as the highest priority or has a missing value, and 0 otherwise.
Female	=	An indicator variable, which equals 1 if the auditor is female and 0 otherwise.
Partner	=	An indicator variable, which equals 1 if the auditor is a partner or a director, and 0 otherwise.
Manager		An indicator variable, which equals 1 if the auditor is a senior manager, manager or associate manager, and 0 otherwise.
HigherEducation	=	An indicator variable, which equals 1 if the auditor has a master’s degree or above, and 0 if she has a bachelor’s degree.
EngExperience	=	The respondent’s experience of the audit engagement in years.