Clash of corporate governance logics obscuring auditor independence

Abstract

Audit committees are regarded by regulators as beneficial for improving audit independence and are hence globally enforced. This study aligns with research that questions whether audit committees function well in nations that differ from the Anglo‐Saxon model. The aim of the study is to examine if the auditor and audit committee relationship conforms with a Swedish or Anglo‐Saxon logic, and to analyze the impact on auditor independence. A critical discourse analysis is undertaken on corporate governance reports and three dimensions of logics are found: one complying with Swedish logic (compliance) and two according to Anglo‐Saxon logic (varieties of subordination). The study indicates that the discourse on audit committees following an Anglo‐Saxon logic in this national setting constructs a power relation with the auditor that hampers the auditor's independence, and hence, that auditor independence is context bound. The importance of the composition of the audit committee and its members independence also from larger owners is discussed. The study contributes to research that marks the importance of a better understanding of national jurisdictions before international harmonization can be achieved.

Bibliometric Analysis Research on Audit Nexus in Corporate Governance

“…Audit committees and corporate governance have a perceived alignment because they focus on internal audit and external audit reporting. By matching the functions of an audit committee with corporate governance in the literature reviews, The study found the quality of an audit committee attributes research on corporate governance is positive when associated with firm performance (Kooli & Abadli, 2021;Kooli, 2019;Alander, 2019;Gebrayel et al, 2018;Brown, Popova, & Velina, 2016;Samaha, Khlif, & Hussainey, 2015;Al-Najjr & Abed, 2015).…”

“…The review has evidenced empirical studies (e.g. Kooli & Abadli, 2021;Kooli, 2019;Alander, 2019;Gebrayel et al, 2018;Brown, Popova, & Velina, 2016;Samaha, Khlif, & Hussainey, 2015;Al-Najjr & Abed, 2015). Despite the prior empirical studies of this scientific field there still remains further studies to provide insight of their relative functions in both developed and developing economies.…”

Linking Corporate Institutional Logics and Moral Reasoning – Evidence from Large Danish Audit Firms

“…Second, previous institutional logic studies of accounting firms are within Anglo-American jurisdictions, which differ substantially from a Continental European and Scandinavian context. Despite the globalizing influence of the large audit firms, auditors are individuals and it is possible that institutional logics vary in different countries (Lander et al, 2013;Alander, 2019). We thus contribute by examining institutional logics in the European context, specifically Denmark.…”