The determinants of auditor choice and audit pricing among property-liability insurers

Hsu, Wen-Yen; Troy, Carol; Huang, Yen-Yu

doi:10.1016/j.jaccpubpol.2014.09.001

Cited by 20 publications

(11 citation statements)

References 75 publications

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“…In addition, previous related studies (e.g., Hope et al 2008;Ben-Hassoun et al 2018) suggest that company's leverage may influence auditor choice as it is considered a proxy for audit risks (e.g., Chan et al 1993;Whisenant et al 2003). Accordingly, and consistent with similar previous research (e.g., Hsu et al 2018;Ben-Hassoun et al 2018;Hsu et al 2015;Lin and Liu, 2009), the LEV variable is added to the regression model as a measure of company's leverage. This variable is measured as the company's long-term liabilities to total assets, and is expected to have a positive regression coefficient.…”

Section: Control Variablesmentioning

confidence: 66%

“…Previous audit research (e.g., Hay and Davis, 2004;Beisland et al 2015) suggests that a firm's choice of an audit firm reflects its desired level of audit quality. Audit research (e.g., Hsu et al 2015) also suggests that 'Big 4' audit firms differ from 'non-Big 4' firms in terms of the level of quality, specialty, and expertise they are capable of providing. Company's selection of external audit firm, however, is expected to be influenced by several considerations, including pressures of the different groups of firm's stakeholders (Knechel et al 2008;Beisland et al 2015).…”

Section: Theoretical Background and Literature Review Auditor Typmentioning

confidence: 99%

“…Audit research (e.g., Becker et al 1998;Kim et al 2003;Hsu et al 2015;Ben-Hassoun et al 2018;Jiraporn et al 2018) has long viewed audit firm type (Big 4 vs. non-Big 4) as an influential factor in determining the quality of the financial statements audit. Researchers (e.g., Fan and Wong, 2005;Eshleman and Guo, 2014;Asthana et al 2015;Knechel, 2016) have typically viewed 'Big' audit firms to provide higher quality audit than 'non-Big' firms as a result of their competitive advantages in terms of scale of operations, technical competencies, and market reputation.…”

Section: Introductionmentioning

confidence: 99%

“…Researchers (e.g., Fan and Wong, 2005;Eshleman and Guo, 2014;Asthana et al 2015;Knechel, 2016) have typically viewed 'Big' audit firms to provide higher quality audit than 'non-Big' firms as a result of their competitive advantages in terms of scale of operations, technical competencies, and market reputation. Accordingly, several audit studies (e.g., Firth and Smith, 1992;Beasley and Petroni, 2001;Lin and Liu, 2009;Hsu et al 2015;Husnin et al 2016;Lai et al 2017) were carried out to investigate factors related to audit client's choice to hire "Big 4" vs. "non-Big 4" external audit firm. Although audit research has investigated auditor choice for quite some time, a relatively recent stream of this research has focused on the effect of CG factors on this choice (Hay et al 2006).…”

Section: Introductionmentioning

confidence: 99%

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Corporate Governance and Auditor Choice in Kuwait

Al-Hajri¹

2018

SBE

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Although auditor choice has been studied extensively in the audit literature, research examining this issue in developing markets has been scarce thus far. The objective of this study is to investigate the impact of corporate governance (CG) on external auditor choice in the context of the small Kuwaiti emerging market. Specifically, the present study uses both a survey and hand-collected 2012 fiscalyear data pertinent to 53 Kuwaiti listed companies to examine whether firm's auditor choice is influenced by company's board size, board independence, directors' shareholdings, Audit Committee (AC) size, and/or AC independence. Using a logistic regression model, the study's results reveal evidence of a meaningful relation between auditor choice and AC size, company's leverage, and company's belonging to the finance sector. These findings could be useful to market regulators and corporate executives, especially in Kuwait, in improving CG practices within corporations. The research findings should also be of value to international researchers interested in carrying out related research.

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Section: Control Variablesmentioning

confidence: 66%

Section: Theoretical Background and Literature Review Auditor Typmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Corporate Governance and Auditor Choice in Kuwait

Al-Hajri¹

2018

SBE

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“…Specifically, we examine how plan managers exercise reporting discretion for claims associated with 17. Hsu et al (2015) examine the relations among insurer characteristics, auditor choice and auditor fees.…”

Section: Do Health Insurers Manage Their Medical Loss Ratios?mentioning

confidence: 99%

Do Health Insurers Manage Their Medical Loss Ratios? At What Cost?

Plummer¹,

Wempe²

2021

JIR

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We use plan-level data to examine a reporting incentive unique to health insurers—the federal Affordable Care Act’s (ACA’s) Medical Loss Ratio (MLR) provisions—which require that health plans spend a specified percentage of premiums on claims or else pay policyholder rebates. While there are no penalties for noncompliance with the MLR provisions, incentives for insurers to comply include avoiding political and reputation costs, reducing administrative burdens, and eliminating rebate payments. We find that health plans with pre-managed MLRs— i.e., the MLRs that would be reported without reporting discretion—below the required MLR overstate claims, thereby increasing their MLRs and reducing or eliminating rebate payments. Overall, results suggest that overstating claims reduced rebate payments by approximately $190 million to $325 million for 20112013; i.e., about 10–17% of total rebates actually paid. We also find that plans with pre-managed MLRs significantly greater than the minimum required MLR understate claims, thereby improving plan earnings while still complying with the MLR provisions. These understatements average between 14–34% of plans’ pre-tax earnings.

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Organisational structure, corporate governance and reinsurance decisions in the U.S. property-liability insurance industry

Lai

Han

et al. 2021

Geneva Pap Risk Insur Issues Pract

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The determinants of auditor choice and audit pricing among property-liability insurers

Cited by 20 publications

References 75 publications

Corporate Governance and Auditor Choice in Kuwait

Corporate Governance and Auditor Choice in Kuwait

Do Health Insurers Manage Their Medical Loss Ratios? At What Cost?

Organisational structure, corporate governance and reinsurance decisions in the U.S. property-liability insurance industry

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