Agency Costs and Auditor Changes: Some Evidence in France

Comptabilité - Contrôle - Audit (Accounting, Auditing and Control), Vol. 9, No. 2, pp. 5-30, 2003

Posted: 4 Nov 2005 Last revised: 5 Oct 2015

See all articles by Charles Piot

Charles Piot

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

Abstract

This study investigates the role of agency costs concerning auditor changes and reputation adjustments decisions in French listed companies. Theoretical precepts suggest a positive relationship between the level or evolution of agency costs and auditor reputation. Univariate and logistic analysis of 41 auditor change and 44 auditor renewal companies, between 1996 and 1998, documents that the auditor change decision itself is mainly driven by a regulatory factor (i.e. the termination of non-effective joint-auditing engagements). Elsewhere, the increase in leverage over the last six financial years is an incentive for companies to nominate more reputed statutory auditors, consistent with the hypothesis that the credibility of accounting numbers depends on agency costs generated by leverage.

Keywords: Audit quality, agency costs, financial reporting

JEL Classification: G30, G32, M41

Suggested Citation

Piot, Charles, Agency Costs and Auditor Changes: Some Evidence in France. Comptabilité - Contrôle - Audit (Accounting, Auditing and Control), Vol. 9, No. 2, pp. 5-30, 2003. Available at SSRN: https://ssrn.com/abstract=831544

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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