Government procurement and financial statement certification: Evidence from private firms in emerging economies

• 成果类型: Article
• 署名作者: Hope, Ole-Kristian; Jiang, Shushu; Vyas, Dushyantkumar
• 署名单位: University of Toronto; BI Norwegian Business School; University of Toronto
• 刊物名称: JOURNAL OF INTERNATIONAL BUSINESS STUDIES
• ISSN/ISSBN: 0047-2506
• DOI: 10.1057/s41267-020-00382-2
• 发表日期: 2021
• 页码: 718-745
• 关键词: Government procurement; financial statement certification; Private Firms; emerging economies; auditing

摘要

In this paper, we examine the monitoring role of government customers in emerging markets, a setting where public procurement is significant but the procurement institutions are weak. In these countries, financial statement certifications could be an important mechanism for a private firm to facilitate contracting with governments. Employing a sample of private firms across 98 emerging economies, we first document in-depth private-firm audit regulations for each country. We find that firms are more likely to have financial statements certified by an external auditor when they have government contracts. We further find that the association is less pronounced when governments have weaker monitoring incentives - when suppliers are subject to monitoring from tax authorities or creditors, when government contracting officials receive bribes, and when government spending is less transparent. We corroborate our inferences using the staggered adoption of an E-Procurement system to infer changes in governments' monitoring incentives and several other robustness checks.