Assessing the Influence of Corporate Political Connections on Auditor Independence and Objectivity

Posted: May 20, 2018

• Olivia Flores
• Declan Boyd
• Ronan Chavez

Abstract

The integrity of financial reporting rests fundamentally upon the independence and objectivity of external auditors. While regulatory frameworks have extensively addressed overt threats to auditor independence, such as financial dependencies and non-audit services, the subtle influence of corporate political connections remains a largely uncharted territory in auditing research. This study addresses this critical gap by investigating how corporate political networks may compromise auditor judgment and decision-making processes. Auditor independence represents the cornerstone of audit quality, ensuring that professional skepticism and objective evaluation guide the audit process. Traditional threats to independence have been well-documented in the literature, including financial relationships, client importance, and long tenure. However, the complex web of political connections that corporations cultivate through campaign contributions, lobbying activities, and board member political affiliations presents a more nuanced challenge to auditor objectivity. These connections create implicit pressures and relational dynamics that may influence