The scale and scope of the client portfolio and audit quality at the individual auditor level: evidence from China
研究了中国2001-2016年个体审计师数据，发现客户组合规模越大审计质量越高，但客户行业范围越广审计质量越低，规模反映能力，范围反映工作量。
We examine the relation between the scale and scope of an individual auditor’s client portfolio and audit quality. Using a sample of auditor-years for the period of 2001–2016 from China, where the personal identities of signing auditors are publicly disclosed, we find that auditors with large client portfolio scale (measured by an auditor’s total audit fees from clients) provide higher quality audits (measured by discretionary accruals and the likelihood of issuing modified audit opinions). However, auditors with large client portfolio scope (measured by the number of industries where clients are located) provide lower quality audits. Further analyses indicate that auditors of higher ability and reputation tend to have larger client scales and wider client scopes. Overall, our results suggest that, at the individual auditor level, the scale of the client portfolio conveys the auditor’s ability, and given the scale, the industry and geographic scope of clients reflects the auditor’s workload.