Foreign ownership and auditor choice

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal

14 Scopus Citations
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Detail(s)

Original languageEnglish
Pages (from-to)401-418
Journal / PublicationJournal of Accounting and Public Policy
Volume33
Issue number4
Online published18 Apr 2014
Publication statusPublished - Jul 2014

Abstract

We take advantage of the unique institutional background of the B-share stock market in China to explore the impact of foreign investors on auditor choice. Our results show that the percentage of B-share firms audited by Big 4 auditors has decreased with both economic and statistical significance since the segmented B-share market was opened to domestic investors in 2001. We find that the negative effect of opening the B-share market on demand for high audit quality is more pronounced for firms with greater decreases in foreign ownership and for firms with strong incentives to be opaque, such as those in a weak institutional environment, firms with more "other receivables," firms with more related-party transactions, and firms with political connections. Additional analysis shows that our results are not driven by the concurrent decline in capital-raising activities in the B-share market. © 2014 Elsevier Inc.

Citation Format(s)

Foreign ownership and auditor choice. / He, Xianjie; Rui, Oliver; Zheng, Liu; Zhu, Hongjun.

In: Journal of Accounting and Public Policy, Vol. 33, No. 4, 07.2014, p. 401-418.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal