Assessing France's joint audit requirement: Are two heads better than one?

Francis, JR; Richard, C; Vanstraelen, A

Assessing France's joint audit requirement: Are two heads better than one?

Francis, JR Richard, C Vanstraelen, A

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Publication Type:: Journal Article
Citation:: Auditing, 2009, 28 (2), pp. 35 - 63
Issue Date:: 2009-11-01

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Field	Value	Language
dc.contributor.author	Francis, JR	en_US
dc.contributor.author	Richard, C	en_US
dc.contributor.author	Vanstraelen, A	en_US
dc.date.issued	2009-11-01	en_US
dc.identifier.citation	Auditing, 2009, 28 (2), pp. 35 - 63	en_US
dc.identifier.issn	0278-0380	en_US
dc.identifier.uri	http://hdl.handle.net/10453/29807
dc.description.abstract	We examine auditor choice for listed companies in France where two (joint) auditors are required by law. This unique setting creates more complex auditor choice than the typical Big 4/non-Big 4 dichotomy in other countries, and we study if a firm's ownership structure affects its auditor-pair choice as well the consequences on earning quality. The findings are consistent with agency theory and indicate that a Big 4 auditor (paired with a non-Big 4 auditor) is more likely to be used when there is greater information asymmetry (less family control and more diversified ownership structures), and that these associations are even stronger for firms with two Big 4 auditors conducting the joint audit. We also test if a firm's auditor-pair choice affects earnings quality and find that firms using one Big 4 auditor (paired with a non-Big 4 auditor) have smaller income-increasing abnormal accruals compared to firms that use no Big 4 auditors and, once again, find that this effect is even stronger for firms that use two Big 4 auditors.	en_US
dc.relation.ispartof	Auditing	en_US
dc.relation.isbasedon	10.2308/aud.2009.28.2.35	en_US
dc.subject.classification	Accounting	en_US
dc.title	Assessing France's joint audit requirement: Are two heads better than one?	en_US
dc.type	Journal Article
utslib.citation.volume	2	en_US
utslib.citation.volume	28	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	closed_access
pubs.issue	2	en_US
pubs.publication-status	Published	en_US
pubs.volume	28	en_US

Abstract:

We examine auditor choice for listed companies in France where two (joint) auditors are required by law. This unique setting creates more complex auditor choice than the typical Big 4/non-Big 4 dichotomy in other countries, and we study if a firm's ownership structure affects its auditor-pair choice as well the consequences on earning quality. The findings are consistent with agency theory and indicate that a Big 4 auditor (paired with a non-Big 4 auditor) is more likely to be used when there is greater information asymmetry (less family control and more diversified ownership structures), and that these associations are even stronger for firms with two Big 4 auditors conducting the joint audit. We also test if a firm's auditor-pair choice affects earnings quality and find that firms using one Big 4 auditor (paired with a non-Big 4 auditor) have smaller income-increasing abnormal accruals compared to firms that use no Big 4 auditors and, once again, find that this effect is even stronger for firms that use two Big 4 auditors.

Please use this identifier to cite or link to this item:

http://hdl.handle.net/10453/29807