What Drives Voluntary Audit Adoption in Small German Companies?

Posted: 14 Feb 2017 Last revised: 13 Aug 2018

See all articles by Andreas Weik

Andreas Weik

University of Bamberg

Brigitte Eierle

University of Bamberg

Hannu Ojala

University of Tampere; Aalto University - School of Business

Date Written: January 31, 2018

Abstract

The purpose of this study is to validate the drivers of voluntary audit in small companies identified in previous research and uncover additional determinants related to agency conflicts with owners. For our research we use the German institutional setting, documented in the literature as being very different from its Anglo-Saxon equivalent. Based on a random sample of 405 small companies responding to a postal questionnaire survey, we find that the proportion of owners not involved in management, the subsidiary status of a company, a company’s legal form, and the importance of financial statements’ information to management activities all increase the likelihood of voluntary audit. In contrast, firms that outsource accounting tasks to an external expert are less likely to opt for voluntary audit, suggesting that an external expert’s involvement substitutes for an external audit. In addition, due to the absence of a statutory audit history for small companies in Germany, we find that voluntary audits are less common compared with findings from previous studies.

Keywords: voluntary audit, small companies, outsourcing, Germany

JEL Classification: M42

Suggested Citation

Weik, Andreas and Eierle, Brigitte and Ojala, Hannu, What Drives Voluntary Audit Adoption in Small German Companies? (January 31, 2018). Available at SSRN: https://ssrn.com/abstract=2916688 or http://dx.doi.org/10.2139/ssrn.2916688

Andreas Weik (Contact Author)

University of Bamberg ( email )

Feldkirchenstraße 21
Bamberg, 96052
Germany

Brigitte Eierle

University of Bamberg ( email )

Feldkirchenstraße 21
Bamberg, 96052
Germany
00499518632545 (Phone)

HOME PAGE: http://www.uni-bamberg.de/bwl-irwp/home/

Hannu Ojala

University of Tampere ( email )

Tampere, FIN-33101
Finland

Aalto University - School of Business ( email )

P.O. Box 21210
Helsinki, 00101
Finland

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