Auditor selection within a business group: evidence from Taiwan

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• 作者：Yan-Jie Yang ; Jungpao Kang ; Ruey-Ching Lin…
• 关键词：Business group ; Auditor selection ; Vertical relatedness ; Industry specialist ; G32 ; M41
• 刊名：Review of Quantitative Finance and Accounting
• 出版年：2016
• 出版时间：February 2016
• 年：2016
• 卷：46
• 期：2
• 页码：195-215
• 全文大小：446 KB
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• 作者单位：Yan-Jie Yang (1)
  Jungpao Kang (2)
  Ruey-Ching Lin (3)
  Joshua Ronen (4)
  
  1. College of Management, Yuan Ze University, 135 Yuan-Tung Road, Taoyuan, 32003, Taiwan, ROC
  2. Department of Applied Finance, Singapore Management University, Singapore, Singapore
  3. Department of Accounting, Fu Jen Catholic University, New Taipei, Taiwan, ROC
  4. Department of Accounting, Stern School of Business, New York University, New York, USA
  
• 刊物类别：Business and Economics
• 刊物主题：Economics
  Finance and Banking
  Accounting and Auditing
  Econometrics
  Operation Research and Decision Theory
  
• 出版者：Springer Netherlands
• ISSN：1573-7179

文摘

Although auditor selection is well documented in the literature, it is unclear whether group characteristics affect firms’ auditor selection decisions. Generally, a business group is the result of diversification by the core firm. Major decisions of the business group, such as auditor selection, are made by the core firm and influenced by the business group’s characteristics. Using operational and ownership linkages perspectives, this study investigates the determinants of a business group’s member firm engaging the same auditor as its core firm. We employ the input–output relationship of products along a supply chain to construct product vertical relatedness measures between member firms and the core firm, and establish logistic regression models to test our hypotheses. Using a sample of publicly listed business groups in Taiwan from 2000 to 2010, our results suggest that a member firm is more likely to engage the same auditor as its core firm when (1) the core firm engages a Big N auditor, (2) the core firm’s auditor is an industry specialist for both the core firm and its member firm, (3) the degree of vertical relatedness increases, or (4) the controlling shareholders’ deviation of voting rights from cash flow rights increases (hereafter deviation). On the other hand, the likelihood of a member firm engaging the same auditor as its core firm when induced by higher deviation could be offset by the influence of stronger business vertical linkages. Keywords Business group Auditor selection Vertical relatedness Industry specialist