This study investigates the relationship between Confucianism and auditor judgment. Using a sample of Chinese listed firms from 2006 to 2019, we find that the Confucian atmosphere in auditors’ hometowns is positively associated with their audit adjustments. The mechanism analyses show that Confucianism in auditors’ hometowns can influence auditor morality and further affect their judgment. We also find that the positive relationship between Confucianism in auditors’ hometowns and audit adjustments is reinforced by auditor exposure to strong Confucian atmospheres in their places of education and workplaces but weakened by Western culture diffusion. Moreover, auditors who are more influenced by Confucianism are associated with more improvements in client financial reporting quality, more upward and downward adjustments, more small and large adjustments and more audit effort but not higher audit fees. Overall, this study provides evidence that supports the imprinting effect of traditional Confucianism on auditors.

Given the important role of individual auditors in the audit process, appropriate staffing is an essential issue in audit firms. Using unique audit data for both listed and private companies in China, we define the downward mismatch between auditors and clients as an inappropriate assignment of the engagement auditors who are supposed to serve only private companies, but sign the audit reports of public companies. We find that the downward mismatch leads to poor audit quality. The results are robust to various tests, including using alternative proxies, adopting the Propensity Score Matching (PSM) procedure, and controlling for auditor-client fixed effects and audit firm-level mismatch. Additional analyses reveal that the negative effect of downward mismatch on audit quality is less pronounced for audit firms with more education and training expenditures, with more informatisation expenditures, and with more partners available. Moreover, this negative effect is more pronounced when clients' business is more complex. Our findings shed light on the importance of staffing assignment decisions within the audit firm.