| Residential College | false |
| Status | 已發表Published |
| The Impact of Corporate Governance on Auditor Choice --- Evidence from China | |
Lin, Z. ; Liu, M.
| |
| 2009-03-01 | |
| Source Publication | Journal of International Accounting, Auditing and Taxation
 |
| ABS Journal Level | 3 |
| ISSN | 1061-9518 |
| Pages | 44-59 |
| Abstract | As the largest and fastest growing emerging market, China is becoming more and more important to investors throughout the world. The purpose of this paper is to investigate the determinants of firms’ auditor choice in China in respect of their corporate governance mechanism. Normally firms have to take a trade-off in their auditor choice decisions, i.e., to hire high-quality auditors to signal effective audit monitoring and good corporate governance to lower their capital raising costs, or to select low-quality auditors with less effective audit monitoring in order to reap private benefits derived fromweak corporate governance and less-transparent disclosure (the opaqueness gains).We develop a logit regression model to test theimpact of firms’ internal corporate governancemechanism on auditor choice decisions made by IPO firms getting listed during a bear market period of 2001–2004 in China. Three variables are used to proxy for firms’ internal corporate governance mechanism, i.e., the ownership concentration, the size of the supervisory board (SB), and the duality of CEO and chairman of board of directors (BoDs). We classify all auditors in China into large auditors (Top 10) and others (non-Top 10), assuming the large auditors can provide higher quality audit services. The empirical results show that firms with larger controlling shareholders, with smaller size of SB, or in which CEO and BoDs chairman are the same person, are less likely to hire a Top 10 (high-quality) auditor. This suggests that when benefits from lowering capital raising costs are trivial, firms with weaker internal corporate governance mechanism are inclined to choose a low-quality auditor so as to capture and sustain their opaqueness gains. On the other hand, with improvement of corporate governance, firms should be more likely to appoint high-quality auditors. |
| Keyword | Corporate governance Auditor choice Chinese capital market Opaqueness gains |
| Language | 英語English |
| The Source to Article | PB_Publication |
| PUB ID | 40704 |
| Document Type | Journal article |
| Collection | DEPARTMENT OF GOVERNMENT AND PUBLIC ADMINISTRATION |
| Corresponding Author | Lin, Z. |
| Recommended Citation GB/T 7714 | Lin, Z.,Liu, M.. The Impact of Corporate Governance on Auditor Choice --- Evidence from China[J]. Journal of International Accounting, Auditing and Taxation, 2009, 44-59. |
| APA | Lin, Z.., & Liu, M. (2009). The Impact of Corporate Governance on Auditor Choice --- Evidence from China. Journal of International Accounting, Auditing and Taxation, 44-59. |
| MLA | Lin, Z.,et al."The Impact of Corporate Governance on Auditor Choice --- Evidence from China".Journal of International Accounting, Auditing and Taxation (2009):44-59. |
| Files in This Item: | There are no files associated with this item. | |||||
Items in the repository are protected by copyright, with all rights reserved, unless otherwise indicated.
Edit Comment