Date of Award


Degree Type


Degree Name

Master of Philosophy (MPHIL)





First Advisor

Prof. ZHANG Yue


I examine the effect of a common auditor in supply chain on supplier’s performance. A common auditor in supply chain is defined as the same audit firm that provides auditing services to both the supplier and the customer. As the common third party, the common auditor could transfer information between supplier and customer, which might benefit the performance of the supplier. I find that a common auditor can increase supplier’s ROA and this effect is driven by the reduction of supplier’s production cost. I also find that a common auditor can reduce supplier’s receivables conversion periods. This finding gives evidence that supplier gains more bargaining power in supply chain through the presence of common auditor, which might contribute to the positive effect of common auditor on supplier’s ROA. The common auditor effect of improving supplier’s performance is found to be more pronounced when there is high information asymmetry in supply chain, when the supplier and customer use the same audit office, and before the enactment of the Sarbanes-Oxley Act, which gives evidence that common auditor plays an information intermediary role in improving supplier’s performance. As for the information content transferred by common auditor, I find that common auditor can reduce supplier’s bullwhip effect. This finding indicates that common auditor might transfer customer’s demand information to supplier so that the supplier could make better capacity planning and thus reduce production cost. Overall, the results show that supplier can benefit from the presence of common auditor, and the results are robust to alternative measure of common auditor, and potential endogeneity concerns.



Recommended Citation

Zhuang, L. (2021). Common auditor and supplier’s performance (Master's thesis, Lingnan University, Hong Kong). Retrieved from

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