Title

Auditor Resignation And Firm Ownership Structure

Keywords

Auditor resignations; Corporate governance; Family firms; Market reactions

Abstract

This paper investigates whether the likelihood of auditor resignations and the associated stock market reaction in family firms is significantly different from that in non-family firms. It also examines whether the aforementioned associations vary with the identity of the CEO managing family firms founder, descendant, or non-family CEO). Relying on a sample of auditor resignations in the U.S. over five calendar years, 2004- 2008, and using two control samples matched and random) as benchmarks, we document the following. First, the likelihood of auditor resignations in family firms is significantly lower than that in non-family firms. Second, auditor resignations in family firms managed by a founder or non-family CEO descendant) are also less more) frequent compared to non-family firms. Finally, abnormal returns following auditor resignations in family firms and in family firms managed by a non-family CEO are higher less negative) than those in non-family firms. These results are robust to the selection bias resulting from family ownership and contribute to the literature investigating auditor portfolio management decisions.

Publication Date

12-1-2011

Publication Title

Accounting Horizons

Volume

25

Issue

4

Number of Pages

703-727

Document Type

Article

Personal Identifier

scopus

DOI Link

https://doi.org/10.2308/acch-50061

Socpus ID

84255168183 (Scopus)

Source API URL

https://api.elsevier.com/content/abstract/scopus_id/84255168183

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