Culture and Auditor Choice: A Test of the Secrecy Hypothesis

Posted: 26 Feb 2008

See all articles by Ole-Kristian Hope

Ole-Kristian Hope

University of Toronto - Rotman School of Management

Tony Kang

University of Nebraska - Lincoln

Wayne B. Thomas

University of Oklahoma

Yong Keun Yoo

Korea University Business School

Abstract

The purpose of this study is to investigate whether firms' auditor choice relates to national culture. We construct a novel measure of secretiveness based on Hofstede's (1980) cultural factors. Using a very large sample of firms from 37 countries and controlling for a number of firm- and country-level factors, we find that firms in more secretive countries are less likely to hire a Big 4 auditor. We also document that the relation between secrecy dimension of national culture and auditor choice is mitigated by the firms' degree of internationalization. These results establish a link between national culture and financial reporting quality through the firm's choice of auditor.

Keywords: Culture, Secrecy, Auditor Quality, International

JEL Classification: F23, G15, M49, M41, M44, M47

Suggested Citation

Hope, Ole-Kristian and Kang, Tony and Thomas, Wayne B. and Yoo, Yong Keun, Culture and Auditor Choice: A Test of the Secrecy Hypothesis. Journal of Accounting and Public Policy, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1098250

Ole-Kristian Hope (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

HOME PAGE: http://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Hope.aspx

Tony Kang

University of Nebraska - Lincoln ( email )

307 College of Business Administration
Lincoln, NE 68588-0488
United States

Wayne B. Thomas

University of Oklahoma ( email )

Michael F. Price College of Business,
307 W Brooks, Rm 212B
Norman, OK 73019
United States
405-325-5789 (Phone)
405-325-7348 (Fax)

Yong Keun Yoo

Korea University Business School ( email )

1 Anam-dong 5 ka
Seoul, 136-701
Korea, Republic of (South Korea)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
1,940
PlumX Metrics