A Cultural Perspective of Auditor Fraud Detection: The Effects of Guanxi and Mianzi

• In Event: Breakfast and Research Forum
  In Roundtable Session: Table 16: Fraud Issues

Abstract

The extant literature has investigated the issue of auditor fraud detection from various perspectives. The purpose of the present study is to examine the critical roles of two important cultural factors, guanxi and mianzi, in fraud detection. Guanxi refers to an informal exchange of favors underlying a network of relationships that promote accomplishment of business tasks, while mianzi refers to the social status, reputation, and respect accorded to a person by his or her social group. These cultural factors are widely recognized in Asian societies. We hypothesize positive relationships between (1) mianzi and auditor use of guanxi, and (2) auditors’ receptiveness toward management use of guanxi and auditor use of guanxi. In addition, we posit that the benefits of guanxi in auditing fully mediate the relationship between auditor use of guanxi and the likelihood of fraud detection. Analyzes of the responses obtained from 126 Singaporean and 52 Chinese auditors provide support for the hypotheses.

Author

• Arnold Wright, Northeastern University