Board Independence and Audit Firm Type

Beasley, Mark S.; Petroni, Kathy R.

doi:10.2139/ssrn.137582

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Board Independence and Audit Firm Type

34 Pages Posted: 2 Dec 1998

See all articles by Mark S. Beasley

Kathy R. Petroni

Michigan State University - Eli Broad College of Business and Eli Broad Graduate School of Management

Date Written: October 1998

Abstract

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

Beasley, Mark S. and Petroni, Kathy Ruby, Board Independence and Audit Firm Type (October 1998). Available at SSRN: https://ssrn.com/abstract=137582 or http://dx.doi.org/10.2139/ssrn.137582