Family control, corporate governance, and auditor choice: evidence from Italy
by Giuseppe Ianniello; Marco Mainardi; Fabrizio Rossi
International Journal of Accounting and Finance (IJAF), Vol. 5, No. 2, 2015

Abstract: This paper analyses the relationship between family control, some internal corporate governance characteristics, and external auditor choice. In particular, following previous research, we assume that audit services provided by the Big 4 are associated with higher audit quality. Corporate governance is observed through some board of directors (BOD) features. In our empirical analysis, we use a sample of Italian listed companies during the period 2007-2010. We implement univariate (parametric and non-parametric tests) and multivariate analysis (logit model) to test our hypotheses. The empirical analysis shows that family controlled firms, a small BOD, and a concentration of power stemming from the dual role of chairman and chief executive officer (CEO) tend to discourage the choice of a reputable auditor. One possible explanation is that there is a tendency to maintain information asymmetry, with a potentially higher conflict of interest, to the detriment of other stakeholders, particularly the minority shareholders, in a context of strict link between the majority shareholders (the controlling family), the BOD, and the CEO.

Online publication date: Sat, 19-Sep-2015

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Accounting and Finance (IJAF):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com