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Article: Audit firm appointments, audit firm alumni, and audit committee independence

TitleAudit firm appointments, audit firm alumni, and audit committee independence
Authors
KeywordsAffiliations
Audit Committees
Audit Quality
Issue Date2007
PublisherCanadian Academic Accounting Association. The Journal's web site is located at http://www.caaa.ca/CAR/index.html
Citation
Contemporary Accounting Research, 2007, v. 24 n. 1, p. 255-258+4+10-11 How to Cite?
AbstractA company officer is an "alumnus" if he previously worked for an audit firm. Iyer, Bamber, and Barefield (1997) find that alumni have ties with their former audit firms and alumni are more inclined to provide economic benefits to former firms if they have stronger ties. If the alumnus is a senior corporate officer, the alumnus may benefit his former firm by recommending that the company appoint the firm as its auditor. However, the company's audit committee may be concerned that officer-auditor ties threaten audit quality. Therefore, an independent audit committee may not sanction the appointment of the officer's former firm. This study investigates (a) whether companies tend to appoint officers' former audit firms, and (b) whether independent audit committees mitigate this tendency. We document that companies appoint officers' former firms more often than they appoint alternative audit firms. However, companies are less likely to appoint officers' former firms if audit committees are more independent. This suggests that independent audit committees strengthen audit quality by deterring affiliations between audit firms and officers. © CAAA.
Persistent Identifierhttp://hdl.handle.net/10722/177978
ISSN
2015 Impact Factor: 1.782
2015 SCImago Journal Rankings: 2.594
ISI Accession Number ID
References

 

DC FieldValueLanguage
dc.contributor.authorLennox, CSen_US
dc.contributor.authorPark, CWen_US
dc.date.accessioned2012-12-19T09:41:08Z-
dc.date.available2012-12-19T09:41:08Z-
dc.date.issued2007en_US
dc.identifier.citationContemporary Accounting Research, 2007, v. 24 n. 1, p. 255-258+4+10-11en_US
dc.identifier.issn0823-9150en_US
dc.identifier.urihttp://hdl.handle.net/10722/177978-
dc.description.abstractA company officer is an "alumnus" if he previously worked for an audit firm. Iyer, Bamber, and Barefield (1997) find that alumni have ties with their former audit firms and alumni are more inclined to provide economic benefits to former firms if they have stronger ties. If the alumnus is a senior corporate officer, the alumnus may benefit his former firm by recommending that the company appoint the firm as its auditor. However, the company's audit committee may be concerned that officer-auditor ties threaten audit quality. Therefore, an independent audit committee may not sanction the appointment of the officer's former firm. This study investigates (a) whether companies tend to appoint officers' former audit firms, and (b) whether independent audit committees mitigate this tendency. We document that companies appoint officers' former firms more often than they appoint alternative audit firms. However, companies are less likely to appoint officers' former firms if audit committees are more independent. This suggests that independent audit committees strengthen audit quality by deterring affiliations between audit firms and officers. © CAAA.en_US
dc.languageengen_US
dc.publisherCanadian Academic Accounting Association. The Journal's web site is located at http://www.caaa.ca/CAR/index.htmlen_US
dc.relation.ispartofContemporary Accounting Researchen_US
dc.subjectAffiliationsen_US
dc.subjectAudit Committeesen_US
dc.subjectAudit Qualityen_US
dc.titleAudit firm appointments, audit firm alumni, and audit committee independenceen_US
dc.typeArticleen_US
dc.identifier.emailPark, CW: acparkc@hku.hken_US
dc.identifier.authorityPark, CW=rp01090en_US
dc.description.naturelink_to_subscribed_fulltexten_US
dc.identifier.doi10.1506/F024-686L-7233-N62J-
dc.identifier.scopuseid_2-s2.0-33947632384en_US
dc.relation.referenceshttp://www.scopus.com/mlt/select.url?eid=2-s2.0-33947632384&selection=ref&src=s&origin=recordpageen_US
dc.identifier.volume24en_US
dc.identifier.issue1en_US
dc.identifier.spage255en_US
dc.identifier.epage258+4+10en_US
dc.identifier.eissn1911-3846-
dc.identifier.isiWOS:000245153500009-
dc.publisher.placeCanadaen_US
dc.identifier.scopusauthoridLennox, CS=14521159700en_US
dc.identifier.scopusauthoridPark, CW=37062708100en_US

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