TY - JOUR
T1 - Foreign ownership and auditor choice
AU - He, Xianjie
AU - Rui, Oliver Meng
AU - Zhu, Hongjun
AU - Zheng, Liu
PY - 2014
Y1 - 2014
N2 - We take advantage of the unique institutional background of the B-share stock market in China to explore the impact of foreign investors on auditor choice. Our results show that the percentage of B-share firms audited by Big 4 auditors has decreased with both economic and statistical significance since the segmented B-share market was opened to domestic investors in 2001. We find that the negative effect of opening the B-share market on demand for high audit quality is more pronounced for firms with greater decreases in foreign ownership and for firms with strong incentives to be opaque, such as those in a weak institutional environment, firms with more “other receivables,” firms with more related-party transactions, and firms with political connections. Additional analysis shows that our results are not driven by the concurrent decline in capital-raising activities in the B-share market.
AB - We take advantage of the unique institutional background of the B-share stock market in China to explore the impact of foreign investors on auditor choice. Our results show that the percentage of B-share firms audited by Big 4 auditors has decreased with both economic and statistical significance since the segmented B-share market was opened to domestic investors in 2001. We find that the negative effect of opening the B-share market on demand for high audit quality is more pronounced for firms with greater decreases in foreign ownership and for firms with strong incentives to be opaque, such as those in a weak institutional environment, firms with more “other receivables,” firms with more related-party transactions, and firms with political connections. Additional analysis shows that our results are not driven by the concurrent decline in capital-raising activities in the B-share market.
UR - https://www.webofscience.com/api/gateway?GWVersion=2&SrcApp=ceibs_wosapi&SrcAuth=WosAPI&KeyUT=WOS:000340994800006&DestLinkType=FullRecord&DestApp=WOS
U2 - 10.1016/j.jaccpubpol.2014.04.002
DO - 10.1016/j.jaccpubpol.2014.04.002
M3 - Journal
SN - 0278-4254
VL - 33
SP - 401
EP - 418
JO - Journal of Accounting and Public Policy
JF - Journal of Accounting and Public Policy
IS - 4
ER -