Did corporate governance compliance have an impact on auditor selection and quality? Evidence from FTSE 350

Date

2020-07-04

Advisors

Journal Title

Journal ISSN

ISSN

1746-6539

Volume Title

Publisher

Palgrave Macmillan

Type

Article

Peer reviewed

Yes

Abstract

This paper examines the possible effects of corporate governance (GC) on audit quality (AQ) among the FTSE 350 companies. Using a sample of 180 companies from 2012 to 2017 (i.e., 1080 firm-year observations) a binary logistic model has been employed to investigate the CG-AQ nexus. This analysis was supported by conducting a probit logistic model as a sensitivity analysis. Our findings are associative of a heterogeneous impact of CG on AQ post the implementation of the 2012 CG reforms in the UK. For example, although institutional ownership and management ownership are positively associated with auditor selection and AQ, board independence, non-executive directors and audit committee are not attributed to AQ in the UK. This implies that corporate compliance with good CG practices has a limited impact on the decision to select a Big4 auditor in the UK. Despite the limitations of our study, we hope it can motivate further investigations in this area.

Description

The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.

Keywords

Corporate governance, audit quality, auditor selection, FTSE 350, UK

Citation

Gerged, A.M., Babikir, B.M., and Elmghaamez, I. (2020) Did corporate governance compliance have an impact on auditor selection and quality? Evidence from FTSE 350. International Journal of Disclosure and Governance, 17, pp. 51-60

Rights

Research Institute

Centre for Research in Accountability, Governance and Sustainability (CRAGS)