← Search

Contemporary Accounting Research Vol. 41 No. 2 2024

Foreign labor and audit quality: Evidence from newly hired H‐1B visa holders

Tracie Frost1; Jiao Jing2; Longfei Shang3; Lixin Su1

1 School of Accounting and Finance, The Hong Kong Polytechnic University Hung Hom Kowloon Hong Kong · 2 Department of Accounting Jinan University Guangzhou China · 3 School of Finance, Southwestern University of Finance and Economics Chengdu China

open access

Abstract

Foreign workers have been an important part of the labor force in public accounting firms over the past two decades. In this paper, we investigate whether and why foreign workers influence audit quality. We find that audit offices with more newly hired foreign labor have a lower mean absolute value of discretionary accruals and a smaller rate of restatements for their clients. The effect is more pronounced for audit offices that face more resource constraints or require greater foreign expertise. The results of improved audit quality are robust to alternative measures of immigrant intensity and audit quality, alternative samples, and using different ways to address endogeneity concerns. Overall, our paper contributes to the literature by showing the impact of foreign labor in the auditing profession and provides public policy implications for the recent H‐1B visa debate.

DOI
10.1111/1911-3846.12927
Volume
41
Issue
2
Pages
842-871
Language
en
Sources
bibtex:phds-export.bib openalex crossref

Cite