Board independence and audit-firm type

Citation
Ms. Beasley et Kr. Petroni, Board independence and audit-firm type, AUDITING, 20(1), 2001, pp. 97-114
Citations number
45
Categorie Soggetti
Economics
Journal title
AUDITING-A JOURNAL OF PRACTICE & THEORY
ISSN journal
02780380 → ACNP
Volume
20
Issue
1
Year of publication
2001
Pages
97 - 114
Database
ISI
SICI code
0278-0380(200103)20:1<97:BIAAT>2.0.ZU;2-T
Abstract
This paper investigates the role of outside members of the board of directo rs in the choice of external auditor for property-liability insurance compa nies. Consistent with our hypothesis that we derive from theories of both c orporate governance and audit quality, we find that the likelihood of an in surer employing a brand name auditor that specializes in the insurance indu stry is increasing in the percentage of the members of the board of directo rs that are considered outsiders. However, we do not find a significant ass ociation between board composition and the choice of using a nonspecialist brand name (Big 6) auditor and a nonbrand name auditor, suggesting speciali zation is considered to be important, but not brand name in this setting.