Board Ethics and Auditor Choice – International Evidence
Victoria University of Wellington - Victoria Business School
Tony Van Zijl
Victoria University of Wellington - Faculty of Commerce and Administration
Keitha L. Dunstan
Bond University - School of Business
A.K.M. Waresul Karim
Saint Mary's College of California - Graduate Business Programs
December 23, 2010
This study examines the effect of board ethics and board size on firms’ choice of external auditor. Using a large sample of 132,853 firm year observations from forty-six countries around the globe, we find that the level of board ethics in the firm’s country of domicile has a positive impact on the likelihood of choice of a Big 4 audit firm. However, we also find that increasing level of board ethics moderates the impact of board size on the likelihood of choice a Big 4 audit firm. These results establish, through the firm’s choice of auditor, an indirect link between the level of board ethics in the firm’s country of domicile and financial reporting quality.
Number of Pages in PDF File: 31
Keywords: Ethics, board ethics, auditor quality, board size, corporate ethics
JEL Classification: F23, F42, G15, M41working papers series
Date posted: April 12, 2010 ; Last revised: December 18, 2012
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