Strategic deviance and auditor selection

Autor:	Xueyan Dong, Yijing Cui, Jingyu Gao
Jazyk:	angličtina
Rok vydání:	2021
Předmět:	Strategic deviance auditor selection agency costs legitimacy high-quality auditor Accounting. Bookkeeping HF5601-5689 Finance HG1-9999
Zdroj:	China Journal of Accounting Studies, Vol 9, Iss 1, Pp 81-112 (2021)
Druh dokumentu:	article
ISSN:	21697213 2169-7221 2169-7213
DOI:	10.1080/21697213.2021.1927769
Popis:	Using data of Chinese A-share non-financial listed companies spanning years 2003–2018, we examine whether a firm’s business strategy that deviates from industry conventions influences corporate governance mechanisms, particularly the probability of choosing high-quality external auditors. We document a significantly positive correlation between a firm’s strategic deviance and high-quality auditor engagement. The exacerbation of agency conflict is an important driver for firms with strategic deviance to hire high-quality auditors. Moreover, we find evidence that hiring Big 4 auditors can curb earnings management and capital occupation of major shareholders in firms with a deviant strategy. We conclude that strategically deviant firms hire high-quality auditors due to agency conflicts.
Databáze:	Directory of Open Access Journals
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