Governance Role of Auditors and Legal Environment: Evidence from Corporate Disclosure Transparency

Posted: 31 May 2011

See all articles by Sam Han

Sam Han

Korea University Business School

Tony Kang

University of Nebraska - Lincoln

Yong Keun Yoo

Korea University Business School

Date Written: May 30, 2011

Abstract

In a sample of firms originating from 20 countries, we examine whether and how auditor size (our proxy for audit quality) associates with corporate disclosure transparency. While prior studies examine the relation between auditor size and several aspects of financial reporting quality (e.g., discretionary accruals, restatements, etc.), there is limited evidence on how auditor size relates to disclosure transparency. There is also mixed evidence on how auditor size relates to reporting quality in different legal environments. We find that auditor size is positively associated with disclosure transparency around the world and that the association is stronger in code law regimes than in common law regimes. The latter finding supports the view that audits play a greater governing role in weaker legal environments.

Suggested Citation

Han, Sam and Kang, Tony and Yoo, Yong Keun, Governance Role of Auditors and Legal Environment: Evidence from Corporate Disclosure Transparency (May 30, 2011). European Accounting Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1855783

Sam Han

Korea University Business School ( email )

Anam-Dong 5 Ga, Seongbuk-Gu
Seoul, 136-701
Korea, Republic of (South Korea)
+82-2-3290-2839 (Phone)

Tony Kang (Contact Author)

University of Nebraska - Lincoln ( email )

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

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
822
PlumX Metrics