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RAAS 2023/12
Vol.13 No.2:
41-74
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The Influence of Corporate Auditors' Networks Centrality on the Informativeness of Accounting Earnings and Stock Price Synchronicity
Shu-Ling Yeh1*, and Tsung-Kai Wu1
1Department of Accountancy, National Taipei University
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Abstract:
In Taiwan's audit market, two individual auditors are required to sign their names on the audit report, and each auditor is engaged by multiple clients. Therefore, there exists a network filled with common signing auditor ties in the audit market. The nodes, representing individual firms, and the linkages, representing the common signing auditor between firms, form a common signing auditor network. The purposes of this study is to examine the impact of the centrality of the audit market of the company on the capital market through the perspective of networks research and the information intermediary role of the auditor. In the first part, we will test if the network centrality of the company has a significant positive influence on the informativeness of accounting earnings. In the second part, we'd like to test the association between the network centrality of the company and stock price synchronicity. Research samples will be collected from Taiwanese list and OTC firms in Taiwan from 2013 to 2020. The results show that the network centrality of the company has a significant positive influence on the informativeness of accounting earnings. We also find the betweenness centrality of the company has a significant negative influence on the stock price synchronicity. The research findings will connect the research between auditing field and capital market, especially draw a better understanding about the effect of company’s audit market centrality on the capital market. Moreover. the research findings provide a more complete evidence about the information intermediary role of the auditor.
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Keywords: Corporate auditors' networks; Informativeness of accounting earnings; Stock price synchronicity; The information role of the auditor
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Corresponding author
; e-mail: eling@mail.ntpu.edu.tw
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©
2023
Review of Accounting and Auditing Studies, ISSN 2221-9374
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