Auditors' governance functions and legal environments: An international investigation

• 成果类型: Article
• 署名作者: Choi, Jong-Hag; Wong, T. J.
• 署名单位: Seoul National University (SNU); Chinese University of Hong Kong
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1506/X478-1075-4PW5-1501
• 发表日期: 2007
• 页码: 13-+
• 关键词: CORPORATE GOVERNANCE; Investor protection; VALUE RELEVANCE; UNITED-STATES; MARKET; OWNERSHIP; QUALITY; determinants; STANDARDS; analysts

摘要

This paper uses firm-level data collected from 39 countries to study whether national legal environments increase or decrease auditors' governance functions in serving the bonding and signaling role. On the one hand, Big 5 auditors may play a stronger governance role in weaker legal environments because they are good substitutes for legal protection of outside investors and risky firms find Big 5 auditors more affordable because of lower litigation costs. On the other hand, a country's poor legal environment may significantly weaken the demand for and supply of quality audits, lessening their role as a bonding mechanism and a credible signaling mechanism. Our empirical results provide support for the former view that Big 5 auditors fulfill a stronger governance function in weaker legal environments.