Corporate giving is a substantial expenditure for firms. However, understanding the motives behind such spending remains challenging. This study tests the agency motive of corporate philanthropy by investigating top executives' zodiac year superstition, a culturally embedded, time-varying phenomenon. We find that firms led by board chairs in their zodiac years exhibit a significant increase in charitable donations, with the effects being stronger for firms led by board chairs with lower educational attainment and a lack of overseas experience, as well as non–state owned firms, underperforming firms, and firms with weak corporate governance. Furthermore, these increases in charitable donations are temporary and do not translate into long-term philanthropic commitments or improved firm performance, corroborating their agency-driven nature. Overall, our study provides new insights into the role of managerial beliefs and preferences in shaping corporate behavior.

ABSTRACT Audits of internal control over financial reporting (ICFR) are typically “integrated” with the audit of the financial statements (FSs)—both audits are conducted by the same audit firm, which designs procedures to satisfy the objectives of both audits simultaneously. A common assumption is that integrating the two audits is more effective and efficient than performing them separately. However, this assumption has not been tested empirically. Using a sample of Chinese companies that employ different audit firms for their FS and ICFR audits (i.e., nonintegrated auditors), we find evidence that challenges this assumption. Specifically, we find ICFR audit quality is higher for nonintegrated audits compared to integrated audits. Moreover, total audit fees are lower for nonintegrated audits, despite higher ICFR audit fees.

ABSTRACT We examine how the Big 4 responded to evolving partner qualification requirements in China. By 2017, at least 80 percent of the Big 4 partners were required to hold CICPA qualifications, a requirement that did not apply to local firms. Using data from a 14-year window around the reform, we document that the Big 4 expanded their partnership and primarily complied through internal promotion of locally licensed auditors, often into junior signing roles and serving new clients. Our analyses of audit outcomes yield mixed and time-varying evidence: although we observe relative increases in restatements in selected periods, the triangulated evidence does not suggest a pervasive deterioration in audit quality. However, we find a decline in the Big 4’s market share and audit fee premium. Overall, our findings shed light on how regulatory interventions targeting auditor qualifications reshape audit firms and market competition. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M4; M40; M41; M42; M49.