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CEO Power and Auditor Choice

Author

Listed:
  • Zenghui Liu

    (Department of Accounting, Western Washington University, USA)

  • Bo Ouyang

    (Management Division, Pennsylvania State University Great Valley, USA)

  • Xiaojie (Christine) Sun

    (Department of Accounting, California State University San Marcos, USA)

Abstract

In this paper, we examine the impact of CEO power on auditor choice. We are motivated by the competing financial reporting incentives arising from CEO power. Our empirical finding suggests thatpowerful CEOs are more likely to hire high-quality auditors as a signal of superior financial reporting quality. We contribute to the literature of auditor switch and extend the research on the links between CEO power and firm behaviors.

Suggested Citation

  • Zenghui Liu & Bo Ouyang & Xiaojie (Christine) Sun, 2015. "CEO Power and Auditor Choice," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 4(4), pages 44-51, October.
    • Handle: RePEc:rbs:ijfbss:v:4:y:2015:i:4:p:44-51
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    References listed on IDEAS

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    1. Jayne M. Godfrey & Jane Hamilton, 2005. "The Impact of R&D Intensity on Demand for Specialist Auditor Services," Contemporary Accounting Research, John Wiley & Sons, vol. 22(1), pages 55-93, March.
    2. Renée B. Adams & Heitor Almeida & Daniel Ferreira, 2005. "Powerful CEOs and Their Impact on Corporate Performance," The Review of Financial Studies, Society for Financial Studies, vol. 18(4), pages 1403-1432.
    3. Joseph P. H. Fan & T. J. Wong, 2005. "Do External Auditors Perform a Corporate Governance Role in Emerging Markets? Evidence from East Asia," Journal of Accounting Research, Wiley Blackwell, vol. 43(1), pages 35-72, March.
    4. DeAngelo, Linda Elizabeth, 1981. "Auditor size and audit quality," Journal of Accounting and Economics, Elsevier, vol. 3(3), pages 183-199, December.
    5. Pornsit Jiraporn & Pandej Chintrakarn & Yixin Liu, 2012. "Capital Structure, CEO Dominance, and Corporate Performance," Journal of Financial Services Research, Springer;Western Finance Association, vol. 42(3), pages 139-158, December.
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    Cited by:

    1. Sayaf Algrady & Xie Xiaojun, 2022. "Influential Factors Affecting Earnings Management in Public Listed Companies: A Conceptual Model," International Review of Management and Marketing, Econjournals, vol. 12(2), pages 1-10, March.
    2. Mohamed M. El-Dyasty & Ahmed A. Elamer, 2021. "The effect of ownership structure and board characteristics on auditor choice: evidence from Egypt," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 18(4), pages 362-377, December.

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