{"title":"Shareholder Governance and Crowding-Out of External Auditing: Evidence From China","authors":"Chenxi Xu, Xu Li, Qian Xin","doi":"10.1111/ijau.12383","DOIUrl":null,"url":null,"abstract":"<div>\n \n <p>This paper examines the relationship between shareholder governance and auditor choice. By exploiting a setting where non-state-owned shareholders are allowed to purchase shares and have delegates in the management team and the board of directors and supervisors of state-owned enterprises (SOEs) in China, we find that non-state-owned shareholder ownership and engagement in firm operations significantly reduce the propensity of SOEs to hire a Big 4 external auditor. This relation is further found to be more pronounced for firms with stronger alternative governance mechanisms and for firms with higher agency costs. Overall, our findings support the notion that non-state-owned shareholder governance partially substitutes external auditing.</p>\n </div>","PeriodicalId":47092,"journal":{"name":"International Journal of Auditing","volume":"29 4","pages":"541-556"},"PeriodicalIF":1.4000,"publicationDate":"2025-05-26","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Journal of Auditing","FirstCategoryId":"91","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/ijau.12383","RegionNum":4,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"BUSINESS, FINANCE","Score":null,"Total":0}
引用次数: 0
Abstract
This paper examines the relationship between shareholder governance and auditor choice. By exploiting a setting where non-state-owned shareholders are allowed to purchase shares and have delegates in the management team and the board of directors and supervisors of state-owned enterprises (SOEs) in China, we find that non-state-owned shareholder ownership and engagement in firm operations significantly reduce the propensity of SOEs to hire a Big 4 external auditor. This relation is further found to be more pronounced for firms with stronger alternative governance mechanisms and for firms with higher agency costs. Overall, our findings support the notion that non-state-owned shareholder governance partially substitutes external auditing.
期刊介绍：
In addition to communicating the results of original auditing research, the International Journal of Auditing also aims to advance knowledge in auditing by publishing critiques, thought leadership papers and literature reviews on specific aspects of auditing. The journal seeks to publish articles that have international appeal either due to the topic transcending national frontiers or due to the clear potential for readers to apply the results or ideas in their local environments. While articles must be methodologically and theoretically sound, any research orientation is acceptable. This means that papers may have an analytical and statistical, behavioural, economic and financial (including agency), sociological, critical, or historical basis. The editors consider articles for publication which fit into one or more of the following subject categories: • Financial statement audits • Public sector/governmental auditing • Internal auditing • Audit education and methods of teaching auditing (including case studies) • Audit aspects of corporate governance, including audit committees • Audit quality • Audit fees and related issues • Environmental, social and sustainability audits • Audit related ethical issues • Audit regulation • Independence issues • Legal liability and other legal issues • Auditing history • New and emerging audit and assurance issues
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