The influence of country culture on external audit monitoring

Main Article Content

Thiago Santos da Silva
Nádia Cardoso Moreira
Danilo Soares Monte-Mor
Silvania Neris Nossa
Willams da Conceição de Oliveira


This paper verifies whether and how the country’s cultural dimensions moderate the relationship between the quality of the audit firm and the level of earnings management. The sample is formed by 88,428 observations from 18,842 companies in 23 countries, covering the period from 2011 to 2018 in an unbalanced panel. The dimensions of national culture were based on the GLOBE project, and the level of earnings management was estimated by Dechow et al. (1995). The results show that national culture influences the monitoring of the largest auditing firms and benefits companies in preparing financial statements. Such results suggest a relationship of audit bias due to cultural aspects, which may compromise the quality of accounting information.


Download data is not yet available.


Metrics Loading ...

Article Details

How to Cite
SILVA, T. S. da; MOREIRA, N. C.; MONTE-MOR, D. S.; NOSSA, S. N.; OLIVEIRA, W. da C. de. The influence of country culture on external audit monitoring. RAE - Revista de Administracao de Empresas , [S. l.], v. 64, n. 5, p. e2023–0436, 2024. DOI: 10.1590/S0034-759020240505. Disponível em: Acesso em: 25 jul. 2024.


Acar, M. (2023). Who affects whom? Impact of the national culture of international audit firms and their affiliates on the financial reporting quality of audit clients. Borsa Istanbul Review, 23(1), 113-135.

Alas, R. (2006). Ethics in countries with different cultural dimensions. Journal of Business Ethics, 69, 237-247.

Aren, S., & Hamamci, H. N. (2023). The effect of individual cultural values and phantasy on risky investment intention. Journal of Economic and Administrative Sciences, 39(4), 847-866.

Bik, O., & Hooghiemstra, R. (2017). The effect of national culture on auditor-in-charge involvement. Auditing: A Journal of Practice & Theory, 36(1), 1-19.

Blodgett, J. G., Lu, L. C., Rose, G. M., & Vitell, S. J. (2001). Ethical sensitivity to stakeholder interests: A cross-cultural comparison. Journal of the Academy of Marketing Science, 29(2), 190-202.

Chaney, P. K., Lodh, S., & Nandy, M. (2021). How does culture impinge upon managers’ demeanor of earnings management? Evidence from cross-country analysis. The International Journal of Accounting, 56(2), 2150009.

Chen, S., Krishnan, G. V., Li, W., & Zhang, Y. (2022). Do Big 4 auditors enhance audit quality in China? A “behind the scenes look”. Journal of International Accounting Research, 21(2), 31-56.

Chen, Y., & Zhang, Y. (2023). Do regional cultural differences affects the effect of accounting firms’ merger: Evidence from China. SAGE Open, 13(2), 1-14.

Choi, A., Choi, J. H., & Sohn, B. C. (2018). The joint effect of audit quality and legal regimes on the use of real earnings management: International evidence. Contemporary Accounting Research, 35(4), 2225-2257.

Chowdhury, S. N., & Eliwa, Y. (2021). The impact of audit quality on real earnings management in the UK context. International Journal of Accounting & Information Management, 29(3), 368-391.

Debnath, N. C., Chowdhury, S. P., & Khan, S. (2022). The impact of audit quality on real earnings management: Evidence from Bangladesh. International Journal of Disclosure and Governance, 19(2), 218-231.

Dechow, P. M., & Skinner, D. J. (2000). Earnings management: Reconciling the views of accounting academics, practitioners, and regulators. Accounting Horizons, 14(2), 235-250.

Dechow, P. M., Sloan, R. G., & Sweeney, A. P. (1995). Detecting earnings management. Accounting Review, 70(2), 193-225.

Dee, C. C., Lulseged, A., & Zhang, T. (2021). Asymmetric monitoring of quarterly financial statements by Big 4 auditors and the SEC’s timely review requirement. Accounting Horizons, 35(4), 63-81.

Diallo, B. (2021). Do national cultures matter for external audits? Evidence from Eastern Europe and the Middle East. Journal of Business Ethics, 172(2), 347-359.

Ding, F., Qiao, Z., Hu, M., & Lu, M. (2022). Industry specialization and audit quality: Evidence from audit firm switches in China. Asia‐Pacific Journal of Financial Studies, 51(5), 657-681.

Doupnik, T. S., & Richter, M. (2004). The impact of culture on the interpretation of “in context” verbal probability expressions. Journal of International Accounting Research, 3(1), 1-20.

Endrawes, M., Leong, S., & Matawie, K. M. (2023). The moderating effect of culture on the relationship between accountability and professional scepticism. Meditari Accountancy Research, 31(2), 381-399.

Ettredge, M., Scholz, S., Smith, K. R., & Sun, L. (2010). How do restatements begin? Evidence of earnings management preceding restated financial reports. Journal of Business Finance & Accounting, 37(3‐4), 332-355.

Fernandes, C. A., & Machado, M. A. V. (2023). Conselho de administração, diversidade de gênero e monitoramento. RAE-Revista de Administração de Empresas, 63(3), e2021-0753.

Francis, J. R., & Wang, D. (2008). The joint effect of investor protection and Big 4 audits on earnings quality around the world. Contemporary Accounting Research, 25(1), 157-191.

Friedrich, C., Pappert, N., & Quick, R. (2023). The anticipation of mandatory audit firm rotation and audit quality. Journal of International Accounting Research, 22(1), 59-81.

Ghoul, S. El, Guedhami, O., & Pittman, J. (2016). Cross-country evidence on the importance of Big Four auditors to equity pricing: The mediating role of legal institutions. Accounting, Organizations and Society, 54, 60-81.

Han, S., Kang, T., Salter, S., & Yoo, Y. K. (2010). A cross country study on the effects of national culture on earnings management. Journal of International Business Studies, 41(1), 123-141.

Hofstede, G. (2001). Culture’s consequences: Comparing values, behaviors, institutions and organizations across nations. Sage Publications.

Hofstede, G., Hofstede, G., & Minkov, M. (1991). Cultures and organizations: Software of the mind. McGraw:Hill.

House, R. J., Hanges, P. J., Javidan, M., Dorfman, P. W., & Gupta, V. (Eds.). (2004). Culture, leadership, and organizations: The GLOBE study of 62 societies. Sage Publications

Jain, S., & Agarwalla, S. K. (2022). Big-4 auditors and audit quality: A novel firm life-cycle approach. Meditari Accountancy Research, 31(5), 1436-1452.

Jones, J. J. (1991). Earnings Management During Import Relief Investigations. Journal of Accounting Research, 29(2), 193–228.

Kania, J., & Fitriany. (2019). The impact of debt covenants violation on audit fee. In Business innovation and development in emerging economies (pp. 47-59). CRC Press.

Karaibrahimoglu, Y. Z., & Cangarli, B. G. (2016). Do auditing and reporting standards affect firms’ ethical behaviours? The moderating role of national culture. Journal of Business Ethics, 139(1), 55-75.

Kharuddin, K. A. M., Basioudis, I. G., & Farooque, O. Al. (2021). Effects of the Big4 national and city-level industry expertise on audit quality in the United Kingdom. Journal of International Accounting, Auditing and Taxation, 43, 100398.

Khlif, H. (2016). Hofstede’s cultural dimensions in accounting research: A review. Meditari Accountancy Research, 24(4), 545-573.

Knowles, R. L., & Paredes, A. A. P. (2023). International culture and audit deficiencies: Evidence from inspection reports of non-US companies listed in the US. Journal of International Accounting, Auditing and Taxation, 51, 100542.

Kyriakou, M. I., & Tsoktouridou, K. (2021). Association between discretionary accruals and audit fees and the role of the size of the audit firm: European Evidence. International Advances in Economic Research, 27, 185-196.

Lawrence, A., Minutti-Meza, M., & Zhang, P. (2011). Can Big 4 versus non-Big 4 differences in audit-quality proxies be attributed to client characteristics? The Accounting Review, 86(1), 259-286.

Leuz, C., Nanda, D., & Wysocki, P. D. (2003). Earnings management and investor protection: An international comparison. Journal of Financial Economics, 69(3), 505-527.

Lewellyn, K. B., & Bao, S. R. (2017). The role of national culture and corruption on managing earnings around the world. Journal of World Business, 52(6), 798-808.

Nelson, M. W., Elliott, J. A., & Tarpley, R. L. (2002). Evidence from auditors about managers’ and auditors’ earnings management decisions. The Accounting Review, 77(1), 175-202.

Pacheco-Paredes, A. A., & Wheatley, C. M. (2017). The influence of culture on real earnings management. International Journal of Emerging Markets, 12(1), 38-57.

Pae, J. (2005). Expected accrual models: the impact of operating cash flows and reversals of accruals. Review of Quantitative Finance and Accounting, 24, 5-22.

Parboteeah, K. P., Bronson, J. W., & Cullen, J. B. (2005). Does national culture affect willingness to justify ethically suspect behaviors? A focus on the GLOBE national culture scheme. International Journal of Cross Cultural Management, 5(2), 123-138.

Singh, H., Sultana, N., Islam, A., & Singh, A. (2022). Busy auditors, financial reporting timeliness and quality. The British Accounting Review, 54(3), 101080.

Svanberg, J., & Öhman, P. (2016). Does ethical culture in audit firms support auditor objectivity? Accounting in Europe, 13(1), 65-79.

Toumi, F., Khlif, H., & Khelil, I. (2022). National culture and audit report lag: Cross-country investigation. Journal of Economic and Administrative Sciences. Ahead-of-print.

Ugrin, J. C., Mason, T. W., & Emley, A. (2017). Culture’s consequence: The relationship between income: Increasing earnings management and IAS/IFRS adoption across cultures. Advances in Accounting, 37, 140-151.

Viana, D. B. C., Jr., Lourenço, I., & Black, E. L. (2022). Financial distress, earnings management and Big 4 auditors in emerging markets. Accounting Research Journal, 35(5), 660-675.

Viana, D. B. C., Jr., Lourenço, I. M. E. C., Ohlson, M., & Lima, G. A. S. F. (2021). National culture and earnings management in developed and emerging countries. Journal of Accounting in Emerging Economies, 12(1), 150-186.

Artigos mais lidos escritos pelo mesmo(s) autor(es)