Author:
Cho Chia-Ching,Wu Chu-Hua
Abstract
Purpose
– The purpose of this study is to investigate whether hiring a high-quality auditor (i.e. industry specialist) depends on corporate governance indicators after controlling a different level of agency conflicts (ACs).
Design/methodology/approach
– This paper uses logistic regressions on 12,449 firm-year samples of Taiwanese public companies from 1998 to 2011 by grouping the samples into three categories (i.e. low, medium and high AC).
Findings
– The results show that the corporate governance indicators can explain the decision of auditor selection only in low and medium AC groups, which suggest that there may be a complementary relationship between external (i.e. auditors) and internal governance when the ACs are mild.
Originality/value
– The paper contributes to the ongoing debate between the complementary and substitutable effects. When the internal ACs are controlled, the internal governance and auditor selection are complemented.
Subject
General Business, Management and Accounting
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