Do Individual Auditors Have Their Own Styles? Evidence from Clients' Financial Statement Comparability in China

In this study, we investigate whether individual auditors have their own style by examining their clients’ financial statement comparability based on a sample from China. Following Francis et al. (2014), we define individual auditor style as an individual auditor’s idiosyncratic approach to implement audit standards and enforce accounting standards. Our results show that pairs of client firms audited by the same individual auditor have more comparable financial statements, supporting the individual auditor style hypothesis. The results are robust to alternative comparability measure, to various sampling method, and to approaches employed to address potential endogeneity. We also find that the individual auditor style is stronger when individual auditors affiliate with local Big Six auditing firms (compared to the international Big Four firms) and when they have expertise. Our study highlights the importance of micro-level institution in promoting financial statement comparability and provides important implications for investors and regulators.