Superstition, Risk Aversion, and Audit Quality: Evidence from China

Huan Dou, Eunice S. Khoo, Weiqiang Tan, Janus Jian Zhang*

*Corresponding author for this work

Research output: Contribution to journalJournal articlepeer-review


We examine whether signing auditors’ perceptions of bad luck related to the Chinese zodiac-year superstition affect audit quality. We argue that these perceptions of bad luck heighten signing auditors’ sense of risk and lead them to act more cautiously in their zodiac years, leading to improved audit quality. We find that clients audited by lead engagement auditors in their zodiac years exhibit lower discretionary accruals and lower propensity to restate. The effects of zodiac-year superstition are evident among lead engagement auditors who are older and hold the partner title. The effects are also evident in large audit firms, which face greater reputation risk, and in provinces with a strong influence of traditional culture. In addition, we find some suggestive evidence that lead engagement auditors may increase audit effort during their zodiac years. Overall, our results support the contention that lead engagement auditors’ zodiac year beliefs positively affect audit quality.
Original languageEnglish
Pages (from-to)1-35
Number of pages35
JournalAUDITING: A Journal of Practice & Theory
Publication statusE-pub ahead of print - 22 Mar 2024

User-Defined Keywords

  • individual auditor
  • traditional culture
  • zodiac year
  • superstition
  • risk aversion
  • audit quality


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