Title

The impact of ethnicity on auditor choice: Malaysian evidence

Document Type

Journal Article

Faculty

Faculty of Business and Law

School

School of Accounting, Finance and Economics / Finance, Economics, Markets and Accounting Research Centre

RAS ID

14351

Comments

This article was originally published as: Nazri, S., Smith, G. M., & Ismail, Z. (2012). The impact of ethnicity on auditor choice: Malaysian evidence. Asian Review of Accounting, 20(3), 198-221. Original article available here

Abstract

Purpose - The purpose of this paper is to examine the impact of ethnicity on auditor choice for Malaysian listed companies. Design/methodology/approach - This study evaluates the effects of various independent variables on auditor choice behaviour, particularly ethnicity of auditor and ethnicity of management, using a logistic regression analysis approach for 300 companies listed on the Bursa Malaysia (formerly known as Kuala Lumpur Stock Exchange-KLSE) over an 18 year period. Findings - Auditor choice is shown to be significantly influenced by client firm's characteristics, notably changes in management, complexity, and financial risk, lending support to the findings of previous survey studies. Ethnicity was found to be a significant factor influencing auditor choice only for auditor switches between non-Big 4 and Big 4 firms. Research limitations/implications - A number of important variables such as corporate governance characteristics, audit fees, client size, and growth that might enhance an understanding of auditor choice behaviour in Malaysia were not incorporated in the regression models, and might be considered in future studies. Originality/value - The results presented in the paper have important implications for both the auditing profession and regulators in Malaysia.

DOI

10.1108/13217341211263265

Access Rights

Not open access

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