Board Independence and Audit Firm Type
34 Pages Posted: 2 Dec 1998
Date Written: October 1998
This paper investigates the role of outside members of the board of directors in the choice of external auditor for property-casualty insurance companies. Consistent with our hypothesis that we derive from theories of both corporate governance and audit quality, we find that the likelihood of an insurer employing a brand name auditor that specializes in the insurance industry is increasing in the percentage of members of the board of directors that are considered outsiders. Interestingly, we do not find any association between board composition and the choice of using a nonspecialist brand name auditor and a non-brand name auditor.
JEL Classification: M49, G32, D23
Suggested Citation: Suggested Citation