Do Industry Specialist Auditors Improve Investment Efficiency?

Bae, Gil S.; Choi, Seung Uk

doi:10.2139/ssrn.2145191

Cited by 8 publications

(18 citation statements)

References 34 publications

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“…Turning to the Korean market, Bae and Choi (2012) document that companies audited by an industry specialist and a Big 4 auditor were associated with lower levels of over-investment and under-investment compared to those that did not hire either type. In addition, Park and Kwon (2012) report that firms with a higher proportion of foreign investors had higher levels of investment efficiency because these investors were able to fulfill their role as monitors effectively, which had a positive impact on management's investing activities.…”

Section: Investment Efficiencymentioning

confidence: 99%

Female directors on the board and investment efficiency: evidence from Korea

et al. 2019

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We investigate whether female board representation affects investment efficiency at Korean publicly traded companies from 2006 to 2014. We find a positive association between female directorship and investment efficiency. For a subsample of firms that are classified into over-and under-investment groups, we find that the subsample of firms with female directors is less likely to over-invest compared to the group without female directors. This implies that female directors' risk-aversion, conservatism, and prudence affect investment efficiency by reducing over-investment rather than reducing under-investment. Other robustness tests corroborate our conclusion that female directors help to improve investment efficiency.

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Section: Investment Efficiencymentioning

confidence: 99%

Female directors on the board and investment efficiency: evidence from Korea

et al. 2019

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“…While different measures are used in the literature to determine market share of audit firm, the most widely used measure is based on the client's total assets. This measure has been widely used by prior research (Balsam et al 2003, Krishnan 2003, Dunn and Mayhew 2004, Lim and Tan 2009, and Bae and Choi 2012.…”

Section: -2-2 Auditor Industry Specializationmentioning

confidence: 99%

“…It is noteworthy that client sales are also used to assess audit firm market share (e.g., Choi 2012 &Sun andLiu 2013). The study will employ this measure in its sensitivity test.…”

Section: -2-2 Auditor Industry Specializationmentioning

confidence: 99%

“…External audit is an external governance mechanism that reviews and evaluates client internal controls and audits their financial reports in order to detect and document material misstatements. Being an integral dimension of corporate governance, a bulk of studies (e.g., Balsam et al 2003, Krishnan 2003, Dunn and Mayhew 2004, Li et al 2010, Bae and Choi 2012, Lenard and Yu 2012, Bae et al 2017 has attempted to link audit proxies to aspects such as firm performance, earnings quality, value relevance, disclosure quality, cost of debt, and investment efficiency.…”

Section: -Introductionmentioning

confidence: 99%

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التأثیر التفاعلی للتخصص الصناعی لمراقب الحسابات وترکز الملکیة على کفاءة الاستثمار: دراسة تطبیقیة على الشرکات المقیدة بالبورصة المصریة (باللغة الانجلیزیة)

اسماعيل¹

2020

مجلة الاسکندریة للبحوث المحاسبیة

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The paper examines the interaction effect of auditor industry specialization and ownership concentration on investment efficiency for a sample of firms listed on the Egyptian Stock Exchange during the period from 2011 through 2018. I predict that specialized auditors and ownership concentration have positive impact on investment efficiency. It's further predicted that specialized auditors moderate the relation between ownership concentration and investment efficiency. Results reveal that specialized auditors enhance investment efficiency, while ownership concentration adversely affects investment efficiency. Results fail to support any interaction effect between auditor industry specialization and ownership concentration.

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“…Meanwhile, the demand for high-quality audit service will increase due to friction in the capital market. Clients have a strong tendency to pay high audit fees for industryspecialist auditors in order to improve accounting information quality, mitigate information asymmetry, reduce capital costs and enhance investment efficiency (Bae, Choi, & Rho, 2012;Craswell, Francis, & Taylor, 1995;Dunn & Mayhew, 2004;Jaggi, Gul, & Lau, 2012;Krishnan, 2003;Li, Xie, & Zhou, 2010).…”

Section: Literature Reviewmentioning

confidence: 99%

Competitive pressure, economies of scale, and auditor industry specialisation premium

Chen

2014

China Journal of Accounting Studies

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This paper examines the premium due to auditor industry specialisation in China's audit market. Using a sample of China's listed firms from 2001 to 2011, we find that industry specialist auditors earn significant premiums at the province level. We also find that competitive pressure has a negative effect on the industry specialisation premium. Furthermore, we document that specialist auditors pass on lower cost savings from economies of scale to clients when facing greater competitive pressure. The results remain robust after controlling for the possible endogeneity issues and using different samples for sensitivity tests. Our results have important implications for future research on the auditor industry specialisation premium.

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Do Industry Specialist Auditors Improve Investment Efficiency?

Cited by 8 publications

References 34 publications

Female directors on the board and investment efficiency: evidence from Korea

Female directors on the board and investment efficiency: evidence from Korea

التأثیر التفاعلی للتخصص الصناعی لمراقب الحسابات وترکز الملکیة على کفاءة الاستثمار: دراسة تطبیقیة على الشرکات المقیدة بالبورصة المصریة (باللغة الانجلیزیة)

Competitive pressure, economies of scale, and auditor industry specialisation premium

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