The effect of auditor characteristics on the value of diversification

Shu Miao Lai, Chih Liang Liu

研究成果: Article同行評審

8 引文 斯高帕斯(Scopus)

摘要

This paper examines how auditor characteristics (size, tenure, and industry specialization) affect the valuation of diversification. As expected, we find that diversified firms have lower market value than single-segment firms, and the diversification discount is smaller when firms employ Big N auditors and auditors with longer tenure. We also find that the diversification discount is larger when companies hire auditors with industry specialization and speculate that an industry focus may limit auditors’ ability to detect misreporting in diversified firms. Also, diversified firms have higher financial reporting and disclosure quality when they employ Big N auditors and auditors with longer tenure, but lower financial reporting and disclosure quality when they employ industry specialist auditors. Overall, our findings suggest that auditor characteristics matter to investors in diversified firms because they contribute to the quality of financial reporting and disclosure, which can mitigate agency problems and the information asymmetry associated with diversification.

原文English
頁(從 - 到)115-137
頁數23
期刊Auditing
37
發行號1
DOIs
出版狀態Published - 二月 2018

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