Government quality,auditor choice and adoption of IFRS: A cross country analysis |
| |
Authors: | Muhammad Nurul Houqe Reza M Monem Tony van Zijl |
| |
Institution: | 1. School of Accounting and Commercial Law, Victoria University of Wellington, New Zealand;2. Griffith Business School, Griffith University, Brisbane, Queensland, Australia |
| |
Abstract: | We examine the association between country-level government quality and firms' choice of external auditors. Using a cross-sectional sample of 142,193 firm-year observations from 46 countries over 1998–2007, we show that the government quality of a country has a significant positive effect on the likelihood of choosing Big 4 auditors by firms in that country. We also show that firms in countries with strong governments that have adopted IFRS are more likely to choose Big 4 than non-Big 4 auditors. To our knowledge, this is the first study of its kind to provide direct evidence on the role of government quality in firms' choice of external auditors. Choice of a Big 4 auditor may be regarded as a proxy for the demand for high quality financial reporting, and thus the results provide insights for policy makers on the importance of government quality toward improving financial reporting quality in a country. |
| |
Keywords: | Government quality Big 4 IFRS Auditor quality Investor protection |
本文献已被 ScienceDirect 等数据库收录! |
|