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Ownership Concentration, Choice of Auditors, and Firm Performance: Evidence from the MENA Region

Author

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  • Farooq Omar

    (Al Akhawayn University)

  • El Kacemi Youssef

    (Al Akhawayn University)

Abstract

Using a large dataset of ownership concentration from the MENA region during the period between 2004 and 2008, we document that ownership concentration does not have a significant impact on firm performance. It is, rather, the way concentrated firms govern themselves that determine their performance. We argue that concentrated ownership firms, being aware of the agency problems embedded in their ownership structure, appoint one of the big-four auditors as their external auditor to signal to the market that they are disclosing reliable information. Our results also show a significantly positive relationship between ownership concentration and the choice of auditor. We further show that for a given level of ownership concentration, appointing one of the big-four auditors leads to superior firm performance.

Suggested Citation

  • Farooq Omar & El Kacemi Youssef, 2011. "Ownership Concentration, Choice of Auditors, and Firm Performance: Evidence from the MENA Region," Review of Middle East Economics and Finance, De Gruyter, vol. 7(2), pages 1-17, September.
    • Handle: RePEc:bpj:rmeecf:v:7:y:2011:i:2:n:4
    DOI: 10.2202/1475-3693.1303
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    References listed on IDEAS

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    Cited by:

    1. Farooq Omar & Tabine Sonia, 2015. "Agency Problems and the Choice of Auditors: Evidence from the MENA Region," Review of Middle East Economics and Finance, De Gruyter, vol. 11(1), pages 79-97, April.

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