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Role of auditor in agency conflict and corporate governance

Role of auditor in agency conflict and corporate governance Purpose – The purpose of this study is to investigate whether hiring a high-quality auditor (i.e. industry specialist) depends on corporate governance indicators after controlling a different level of agency conflicts (ACs). Design/methodology/approach – This paper uses logistic regressions on 12,449 firm-year samples of Taiwanese public companies from 1998 to 2011 by grouping the samples into three categories (i.e. low, medium and high AC). Findings – The results show that the corporate governance indicators can explain the decision of auditor selection only in low and medium AC groups, which suggest that there may be a complementary relationship between external (i.e. auditors) and internal governance when the ACs are mild. Originality/value – The paper contributes to the ongoing debate between the complementary and substitutable effects. When the internal ACs are controlled, the internal governance and auditor selection are complemented. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Chinese Management Studies Emerald Publishing

Role of auditor in agency conflict and corporate governance

Chinese Management Studies , Volume 8 (3): 21 – Jul 29, 2014

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References (45)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1750-614X
DOI
10.1108/CMS-09-2012-0126
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this study is to investigate whether hiring a high-quality auditor (i.e. industry specialist) depends on corporate governance indicators after controlling a different level of agency conflicts (ACs). Design/methodology/approach – This paper uses logistic regressions on 12,449 firm-year samples of Taiwanese public companies from 1998 to 2011 by grouping the samples into three categories (i.e. low, medium and high AC). Findings – The results show that the corporate governance indicators can explain the decision of auditor selection only in low and medium AC groups, which suggest that there may be a complementary relationship between external (i.e. auditors) and internal governance when the ACs are mild. Originality/value – The paper contributes to the ongoing debate between the complementary and substitutable effects. When the internal ACs are controlled, the internal governance and auditor selection are complemented.

Journal

Chinese Management StudiesEmerald Publishing

Published: Jul 29, 2014

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