Determinants of auditor choice: Review of the empirical literature

Habib, Ahsan; Wu, Julia; Bhuiyan, Md. Borhan Uddin; Sun, Xuan Sean

doi:10.1111/ijau.12163

Cited by 36 publications

(46 citation statements)

References 198 publications

(359 reference statements)

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“…Studying the factors motivating companies to demand high-quality auditors such as big4 or industry specialists is an interesting area of research because the evidence is relatively limited (DeFond & Zhang, 2014). Much of the work on auditor selection has been conducted in the context of external audit (Habib et al, 2019; see for recent literature review on auditor choice). The focus of the literature has been on the selection of auditors with a known brand-name, such as the big4 audit firms (e.g., Abbott & Parker, 2000;Beasley & Petroni, 2001;Ettredge et al, 2009;Simunic & Stein, 1987).…”

Section: Empirical Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Determinants of industry expertise outsourced IAF: Do company and auditor attributes affect the selection?

Baatwah

Aljaaidi

Almoataz

et al. 2021

Cogent Business & Management

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Outsourcing the internal aud it function (IAF) is a worldwide practice attractive to companies, practitioners and regulators because it is believed that providers of this function are objective and competent and can provide high-quality audit. This study explores the potential influence of company and auditor characteristics on selecting outsourced IAF providers with industry expertise. Using 334 observations for non-financial companies that outsourced this function to an external provider over the period 2010-2017, logistic regression suggests that company characteristics such as size, issue of new equity, age, and total accruals significantly determine the selection of industry-expertise outsourced IAF (IEOIAF) providers. We report similar findings when considering alternative approaches for measuring industry expertise, using a matching sample method, and controlling for the potential effect of endogeneity. In additional analysis, we explore these ABOUT THE AUTHOR

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Section: Empirical Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Determinants of industry expertise outsourced IAF: Do company and auditor attributes affect the selection?

Baatwah

Aljaaidi

Almoataz

et al. 2021

Cogent Business & Management

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“…The findings of the study meet our expectations that stem from agency theory and highlight the role which corporate governance plays in auditor selection. The negative relationship of auditor choice with family ownership supports the argument that family firms in the absence of a strong external shareholder may be unwilling to appoint high-quality auditors (Khan, Muttakin, & Siddiqui, 2015; Habib et al, 2019). Board independence on the other hand is positively associated with auditor choice suggesting that greater board independence mitigates family influence in family-controlled firms (Matondi, Tucker, & Tommasetti, 2016).…”

Section: Introductionmentioning

confidence: 64%

Corporate governance: Fundamental and challenging issues in scholarly research

2021

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“…However, the effect of audit committee composition on auditor choice is complex with a range of firm‐level and country‐level corporate governance factors (Habib et al. 2019). For instance, Big N audit firms are not appointed for their superior quality of work but because of their connection to directors serving on the audit committees (Davison et al.…”

Section: Review Of Relevant Empirical Literaturementioning

confidence: 99%

The Corporate Governance Role of Audit Committees: Through the Lenses of New Zealand Institutional Investors

Feehily

Lord

2021

Australian Accounting Review

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This paper explores how directors of New Zealand institutional investor entities perceive the role of audit committees in their investee firms. We find that perceptions of audit committee mechanisms by directors of New Zealand institutional investor entities are distinct in terms of: (1) the directors’ knowledge of audit committee mechanisms; (2) directors’ evaluation of the governance role of audit committees; and (3) whether and how audit committees in investee firms affect the investment decisions of institutional investors. We argue that the identities of directors and contextualising events may have contributed to the discrete views taken by the directors of New Zealand institutional investor entities. We use institutional theory and discourse analysis to design and analyse the interviews. Our paper presents evidence from New Zealand, where the adoption of audit committees has been largely driven by regulatory changes overseas. Findings from this paper may be of interest to regulators, researchers and practitioners to make informed comparisons with observations from other countries in examining the function of audit committees and in evaluating the implications of corporate governance regulatory changes. Regulators and other corporate governance stakeholders may benefit from this paper by reflecting on the reciprocal influence between an audit committee and the institutionalisation of governance practices.

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Determinants of auditor choice: Review of the empirical literature

Cited by 36 publications

References 198 publications

Determinants of industry expertise outsourced IAF: Do company and auditor attributes affect the selection?

Determinants of industry expertise outsourced IAF: Do company and auditor attributes affect the selection?

Corporate governance: Fundamental and challenging issues in scholarly research

The Corporate Governance Role of Audit Committees: Through the Lenses of New Zealand Institutional Investors

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