Auditor Reputation and Model of Governance: A Comparison of France, Germany and Canada

24 Pages Posted: 27 Apr 2005

See all articles by Charles Piot

Charles Piot

Univ. Grenoble Alpes; University of Angers - Centre de Recherches Appliquées à la Gestion (CERAG)

Abstract

This paper investigates the determinants of auditor reputation for listed companies in France, Germany and Canada. These countries differ in their financing systems, corporate governance culture and auditing regulations, and thus provide interesting backgrounds to an investigation of auditor role in corporate governance by testing both theories of the demand for auditor reputation, i.e., the agency and insurance (deep pockets) theories. Logistic analyses document that the probability to appoint one of the Greater International Networks (GIN) depends on national environments. The insurance hypothesis dominates in Canada. In France, this probability increases with the intensity of shareholder-debtholder conflicts in highly opportunistic situations. None of these theories finds any support in Germany, consistent with the characteristics of this environment: an insiders dominant and bank-oriented financing system, with an auditor role primarily devoted to the supervisory board, and a very low litigation risk for auditors.

JEL Classification: M41, M49, G34, M47

Suggested Citation

Piot, Charles, Auditor Reputation and Model of Governance: A Comparison of France, Germany and Canada. Available at SSRN: https://ssrn.com/abstract=708651

Charles Piot (Contact Author)

Univ. Grenoble Alpes ( email )

Grenoble Cedex 9, F-38040
France

University of Angers - Centre de Recherches Appliquées à la Gestion (CERAG)

150 rue de la Chimie, BP47
Grenoble Cedex 9, 38040
France

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