The Impact of Corporate Governance on Auditor Choice

Mahdavi, Gholamhossein; Maharlouie, M. M.; Ebrahimi, Fahime; Sarikhani, Mehdi

doi:10.2139/ssrn.1899467

Cited by 10 publications

(15 citation statements)

References 13 publications

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“…Table III that institutional investor (IO) and managerial ownership (MO) have no significant correlation with audit quality, with a pvalue of 0.142, and 0.174 respectively, and hence we do not find support for Hypothesis 3 and 4. This finding is consistent with the finding of [26], [27] and [1]. Also, empirical results show that there is a positive and statistically significant link between audit committee and audit quality, p-value <0.05, supporting Hypothesis 5.…”

Section: B Results Of Logistic Regression Modelsupporting

confidence: 90%

“…Therefore the hypothesis is that growth in the ownership percentage of institutional investors will increase the demand for high-quality audit services and the plausibility of choosing big audit firms. It is believed that an increase in the managers' ownership percentage through a reduction of information asymmetry will decrease the conflict of interest between managers and shareholders [26] and [27]. Reference [26] investigated the relation between ownership structure and demand for audit quality by using information taken from 478 Finnish firms from 2000 to 2006.…”

Section: Ownership Structure and Audit Qualitymentioning

confidence: 99%

“…Further, they find that the probability of choosing a Big4 auditor increases with an increase in firm size and the presence of foreign sales. According to reference [27], increasing the managerial ownership percentage will decrease the possibility of choosing a larger audit firm. Therefore, this lead to the following hypotheses:…”

Section: Ownership Structure and Audit Qualitymentioning

confidence: 99%

“…This variable is dichotomous in nature. Size of audit firm (big 4 and non-big 4) was used as proxy for audit quality [32] and [27]. Audit quality was set equal to one (1) if the information obtained from companies audited reports show that it is audited by one of the "big 4" audit firms, otherwise zero (0).…”

Section: B Definition Of Variablesmentioning

confidence: 99%

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Corporate Governance Practices and Audit Quality: An Empirical Study of the Listed Companies in Egypt

Soliman

Elsalam

2013

SSRN Journal

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Abstract-Recent financial international scandals around theworld have led to a number of investigations into the effectiveness of corporate governance practices and audit quality. Although evidence of corporate governance practices and audit quality exists from developed economies, very scanty studies have been conducted in Egypt where corporate governance is just evolving. Therefore, this study provides evidence on the effectiveness of corporate governance practices and audit quality from a developing country. The data for analysis are gathered from the top 50 most active companies in the Egyptian Stock Exchange, covering the three year period 2007-2009. Logistic regression was used in investigating the questions that were raised in the study. Findings from the study show that board independence; CEO duality and audit committees significantly have relationship with audit quality. The results also, indicate that institutional investor and managerial ownership have no significantly relationship with audit quality. Evidence also exist that size of the company; complexity and business leverage are important factors in audit quality for companies quoted on the Egypt Stock Exchange.

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Section: B Results Of Logistic Regression Modelsupporting

confidence: 90%

Section: Ownership Structure and Audit Qualitymentioning

confidence: 99%

Section: Ownership Structure and Audit Qualitymentioning

confidence: 99%

Section: B Definition Of Variablesmentioning

confidence: 99%

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Corporate Governance Practices and Audit Quality: An Empirical Study of the Listed Companies in Egypt

Soliman

Elsalam

2013

SSRN Journal

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“…Firms with higher agency costs are inclined to choose a high-quality auditor in order to strengthen their corporate governance and thereby alleviate potential agency conflicts (e.g. Francis et al, 1999;Gul and Tsui, 2001;Krishnan, 2003;Mansi et al, 2004;Fan and Wong, 2005;Knechel et al, 2008;Lin and Liu, 2009;Mahdavi et al, 2011;. The second approach (e.g.…”

Section: Introductionmentioning

confidence: 99%

Auditor choice in Italian non-listed firms

Matonti

Tucker

Tommasetti

2016

MAJ

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Purpose: This paper investigates auditor choice in those Italian non-listed firms adopting the 'traditional' model of corporate governance. In Italy, non-listed firms can choose between two types of auditor: the Board of Statutory Auditors (BSA), that is, the statutory auditors, or an 'external' auditor. At the same time, a BSA conducts the administrative auditing for all companies with equity exceeding 120,000 euros.Design/Methodology/Approach: The paper estimates a logistic regression model of firm auditor choice between an external auditor and the BSA which incorporates variables proxying for both agency conflict and organizational complexity effects. Findings:Our results show that of the potential agency factors, only board independence drives auditor choice, whereas organizational complexity and risk factors including firm size, investment in inventories, subsidiary status and complexity drive auditor choice. These results may be explained in the administrative audit role of the BSA which both monitors day-by-day firm operations and the financial statements preparation 'project'. Stakeholders as a result are reassured that in general their interests are protected. Finally, we find that legal form and voluntary IFRS compliance exert an impact on auditor choice.Originality/value: The paper provides support for an internal yet independent auditing body such as the Italian BSA as a wider model for corporate governance in European non-listed firms (OECD, 2004 and. The BSA as an administrative and financial auditing body made up solely of independent highly qualified professionals can work within the firm on an operational basis, and in so doing can increase stakeholder protection.

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Corporate Governance & Auditor Choice in Malaysia

2017

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The aim of this paper is to investigate the determinants of firm's auditor choice in Malaysia in respect of their corporate governance mechanisms. A logit regression model was developed to test the impact of firms' internal corporate governance mechanism on auditor choice decisions made by public listed companies listed on main board of Bursa Malaysia from year 2006 to 2015. Five variables are used to proxy for firm's internal corporate mechanism which are the ownership concentration, the duality of CEO and chairman of BOD, the size of audit committee, the size of BOD and the number of independent directors on the board. All auditors in Malaysia were classified into Big Four and non-Big Four, assuming Big Four auditors can provide higher quality audit services. The final result show that firms with less concentrated ownership, with larger size of audit committee, larger size of the BOD, with lower proportion of independent directors on the board, or in which CEO and BOD's chairman are not the same person are more likely to hire a high-quality auditor. Hence, it suggests that when benefits from lowering capital raising costs are trivial, firms with good corporate governance mechanism are prone to choose a high-quality auditor.

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The Impact of Corporate Governance on Auditor Choice

Cited by 10 publications

References 13 publications

Corporate Governance Practices and Audit Quality: An Empirical Study of the Listed Companies in Egypt

Corporate Governance Practices and Audit Quality: An Empirical Study of the Listed Companies in Egypt

Auditor choice in Italian non-listed firms

Corporate Governance & Auditor Choice in Malaysia

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