Auditor Concentration and the Impact of Interlocking Directorates

Davison, AG; Stening, Bruce W.; Wai, Wan Tai

doi:10.2307/2490712

Cited by 36 publications

(42 citation statements)

References 3 publications

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“…Lai, Srinidhi, Gul, and Tsui () documented a positive association between gender‐diverse boards (presence of at least one female director on the board and audit committee) and the appointment of industry‐specialist auditors . Davison et al () concluded that there was a strong link between companies audited by the same public accounting firm and those having common directors in Australia. Using a sample of the family firms in Hong Kong, Baydoun () found that auditor choice is affected by the existence of cross‐chairmanship in the company.…”

Section: Determinants Of Auditor Choicementioning

confidence: 99%

Determinants of auditor choice: Review of the empirical literature

Habib

Bhuiyan

et al. 2019

Int J Auditing

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We synthesize the empirical archival literature on the determinants of auditor choice in an international setting, critique the findings, and offer suggestions for future research. We categorize the determinants into (i) firm‐level ownership variables, (ii) nonownership corporate governance determinants, (iii) economic determinants driven by the risk of information asymmetry, and (iv) country‐level institutional determinants, including legal protection of investors, political connections, and national culture. Our comprehensive review not only enriches the academic literature, but also provides material of considerable interest to investors, practitioners (auditors), and regulators.

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Section: Determinants Of Auditor Choicementioning

confidence: 99%

Determinants of auditor choice: Review of the empirical literature

Habib

Bhuiyan

et al. 2019

Int J Auditing

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“…Davison et al (1984) argue that the multiple directorships are important to the auditor choice. Carcello et al (2002) find a significant positive relationship between the multiple directorships as a measure of expertise and audit fees.…”

Section: Audit Committee Multiple Directorships Auditor Choice and Amentioning

confidence: 99%

Family Ownership, Auditor Choice and Audit Fees: Evidence from Hong Kong

Lei

Lam²

2018

ijafr

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Purpose -The primary purpose of this paper is to examine the impact of family control/ownership on auditor choice and audit fees in Hong Kong. Besides, this paper also addresses the impact of multiple directorship of audit committee members on these two external auditing dimensions. Findings -The results indicate that family firms have a higher likelihood to appoint Big 5 auditors, it supports the signaling hypothesis. Contrasting the perceived higher audit risk, they incur lower audit fees. The results also show the independent audit committee members with multiple directorships are not affected by their busyness. Our results are also robust to the alternative definition of family firms and by using the sub-sample within 2004 -2009. We also find that the firms controlled by recognized Big family in Hong Kong society incur higher audit fees but no support for family firm incurring higher non audit fee.

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“…First, it is argued that the existence of significant foreign operations increases the likelihood that a large audit firm will be selected since these firms can achieve multinational scale economies (Eichenseher, 1985). Second, it is argued that auditor choice can be partly explained by the existence of interlocking directorates between client companies (Davison, Stening & Wai, 1984). Third, client and auditor structure are believed to be associated, with unstructured clients choosing unstructured auditors and vice versa (Kaplan, Menon & Williams, 1990).…”

Section: Auditor Change Literaturementioning

confidence: 99%

Audit Market Competition: Auditor Changes and the Impact of Tendering

Beattie

Fearnley

1998

The British Accounting Review

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Increased competition within the external audit market and the recent phenomenon of audit tendering has renewed interest in the factors influencing auditor changes. In this paper, a questionnaire instrument is used to elicit perceptions of the factors which influence auditor-client realignments in this new environment and to indicate the relative influence of economic and behavioural factors. Positive, statistically significant associations were found between unsolicited approaches and the consideration of either a change in auditor or the conduct of a competitive tender. Fees are both the most frequently cited reason for considering auditor change and the most frequently cited factor influencing the selection of a new auditor. The chemistry of the relationship with senior audit firm personnel was ranked as more important than service issues in new auditor selection. Several significant associations between the reasons for change and both company size and type of change are identified. In particular, smaller companies, and companies changing from a non-Big Six firm, were more likely to change due to the need for a wider range of services and the influence of third parties. Findings indicated that 55% of auditor changes were effected by means of a tender, with the incumbent auditor having only an 18% chance of retaining the client. The various stages of the tender process appear to be dominated by the finance director, with audit committees having a restricted role. Tenders resulted in significant fee reductions in the year of change.

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Auditor Concentration and the Impact of Interlocking Directorates

Cited by 36 publications

References 3 publications

Determinants of auditor choice: Review of the empirical literature

Determinants of auditor choice: Review of the empirical literature

Family Ownership, Auditor Choice and Audit Fees: Evidence from Hong Kong

Audit Market Competition: Auditor Changes and the Impact of Tendering

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