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External monitoring of private firms: A cross-country empirical analysis

Author

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  • Nikbakht, Ehsan
  • Sarkar, Sayan
  • Spieler, Andrew C.

Abstract

There is limited research which focuses on the use of external monitoring by private companies, domestic or international. We use World Bank data to explore the factors that are associated with the probability of using external monitoring by private firms in emerging and developing countries. In this research, the service of external auditors is considered as a proxy for external monitoring. We tested our results both on the full sample (114 countries) and on 5 different income clusters based on World Bank economic development categorization. From our results, we conclude that there is not a single set of “universal” factors associated with firms' decision to engage external auditors. We observe that factors associated with external auditors, a proxy for monitoring, differ across the various categories of economic development. As a policy implication, there is a need for a voluntary adoption of a uniform set of standards for external monitoring and auditing in this area.

Suggested Citation

  • Nikbakht, Ehsan & Sarkar, Sayan & Spieler, Andrew C., 2017. "External monitoring of private firms: A cross-country empirical analysis," Global Finance Journal, Elsevier, vol. 32(C), pages 113-127.
    • Handle: RePEc:eee:glofin:v:32:y:2017:i:c:p:113-127
    DOI: 10.1016/j.gfj.2016.05.003
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    2. Hong Xu & Yukun Li & Weifen Lin & Hui Wang, 2024. "ESG and customer stability: a perspective based on external and internal supervision and reputation mechanisms," Palgrave Communications, Palgrave Macmillan, vol. 11(1), pages 1-14, December.

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    More about this item

    Keywords

    External monitoring; External audit; Cross-country analysis; Privately-held firms;
    All these keywords.

    JEL classification:

    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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