Audit committee, board characteristics, and auditor switch decisions by Andersen's clients

• 成果类型: Article
• 署名作者: Chen, Ken Y.; Zhou, Jian
• 署名单位: National Taiwan University; State University of New York (SUNY) System; Binghamton University, SUNY
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1506/car.24.4.2
• 发表日期: 2007
• 页码: 1085-+
• 关键词: CORPORATE GOVERNANCE; AGENCY COSTS; firm; INDEPENDENCE; OWNERSHIP; determinants; involvement; performance; reputation; expertise

摘要

Using a sample of hand-collected data on 821 firms that dismissed. Arthur Andersen as their auditor between October 15, 2001 and August 31, 2002, we investigate the role of audit committees and boards of directors in the auditor switch decisions by Andersen's clients. This provides a unique setting to examine auditor choice in a situation where the auditor's reputation is clearly tarnished. We investigate the impact of (1) audit committee size, independence, activity, and financial expertise; and (2) board size and board independence on the timing of dismissal and choice of successor auditors by Andersen's clients. We find that firms with more independent audit committees, audit committees with greater financial expertise, and larger and more independent boards dismissed Andersen earlier. We also find that firms with larger and more active audit committees as well as more independent boards were more likely to choose a Big 4 successor auditor. We thus contribute to the understanding of the role of audit committees and boards of directors in the auditor switch decisions.