TY  - JOUR
AB  - Purpose The purpose of this study is to examine whether the corruption level of a country is associated with a firm’s decision to choose Big 4 versus non-Big 4 auditors. In addition, the authors examine whether firms that are cross-listed in a country with a corruption level different from that of the home country are more likely to appoint Big 4 auditors.Design/methodology/approach Based on a sample of 185,549 firm-year observations from 78 countries over 2003-2012, panel regression analysis is used to investigate the research questions.Findings The authors find a negative association between corruption and the propensity to hire Big 4 auditors and that cross-listed firms are more likely to hire Big 4 auditors than their domestic counterparts. Interestingly, the authors find that when firms cross-list in less corrupt countries relative to their home countries, firms are more likely to hire Big 4 auditors. However, this tendency disappears when firms cross-list in more corrupt countries.Originality/value The authors contribute to the audit choice literature by providing evidence that the political environment, as manifested in the corruption level of a country, plays a role in the decision to choose Big 4 versus non-Big 4 auditors. The study complements the prior auditor choice literature, which focuses mostly on single countries such as the USA, by expanding the scope to 78 countries. Furthermore, the authors enhance the understanding of how the absolute and relative performance of the political environment affects cross-listed firms’ choice of auditors.
VL  - 19
IS  - 2
SN  - 1475-7702
DO  - 10.1108/RAF-12-2018-0273
UR  - https://doi.org/10.1108/RAF-12-2018-0273
AU  - Duh Rong-Ruey
AU  - Ye Chunlai
AU  - Yu Lin-Hui
PY  - 2020
Y1  - 2020/01/01
TI  - Corruption and auditor choice: a cross-country investigation
T2  - Review of Accounting and Finance
PB  - Emerald Publishing Limited
SP  - 175
EP  - 197
Y2  - 2024/04/23
ER  -