Do external auditors perform a corporate governance role in emerging markets? Evidence from East Asia / Joseph P. H. Fan and T.J. Wong

In emerging markets, the concentration of corporate ownership has created agency conflicts between controlling owners and minority shareholders, which are difficult to mitigate through conventional corporate control mechanisms such as boards of directors and takeovers. This study examines whether ex...

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Main Authors:	Fan, Joseph P. H., Wong, T.J.
Format:	Article
Language:	English
Published:	Faculty of Accountancy & Accounting Research Institute (ARI) 2003
Subjects:	Malaysia Accountants Managerial accounting
Online Access:	http://ir.uitm.edu.my/id/eprint/13684/ http://ir.uitm.edu.my/id/eprint/13684/1/AJ_JOSEPH%20P.%20H.%20FAN%20MAR%2003.pdf

id	uitm-13684
recordtype	eprints
spelling	uitm-136842016-07-21T07:47:01Z http://ir.uitm.edu.my/id/eprint/13684/ Do external auditors perform a corporate governance role in emerging markets? Evidence from East Asia / Joseph P. H. Fan and T.J. Wong Fan, Joseph P. H. Wong, T.J. Malaysia Accountants Managerial accounting In emerging markets, the concentration of corporate ownership has created agency conflicts between controlling owners and minority shareholders, which are difficult to mitigate through conventional corporate control mechanisms such as boards of directors and takeovers. This study examines whether external independent auditors could be employed as monitors and as bonding mechanisms to alleviate these agency conflicts. Using a broad sample of firms from eight East Asian economies, we document that firms are more likely to employ Big Five auditors when they are subject to the agency problem imbedded in their ownership structure. In addition, among East Asian auditees subject to the agency problem, Big Five auditors charge a higher fee and set a lower audit modification threshold while non-Big Five auditors do not. Taken together, this evidence suggests that Big Five auditors in emerging markets do have a corporate governance role. Faculty of Accountancy & Accounting Research Institute (ARI) 2003 Article PeerReviewed text en http://ir.uitm.edu.my/id/eprint/13684/1/AJ_JOSEPH%20P.%20H.%20FAN%20MAR%2003.pdf Fan, Joseph P. H. and Wong, T.J. (2003) Do external auditors perform a corporate governance role in emerging markets? Evidence from East Asia / Joseph P. H. Fan and T.J. Wong. Malaysian Accounting Review, 2 (1). pp. 13-45. ISSN 1675-4077
repository_type	Digital Repository
institution_category	Local University
institution	Universiti Teknologi MARA
building	UiTM Institutional Repository
collection	Online Access
language	English
topic	Malaysia Accountants Managerial accounting
spellingShingle	Malaysia Accountants Managerial accounting Fan, Joseph P. H. Wong, T.J. Do external auditors perform a corporate governance role in emerging markets? Evidence from East Asia / Joseph P. H. Fan and T.J. Wong
description	In emerging markets, the concentration of corporate ownership has created agency conflicts between controlling owners and minority shareholders, which are difficult to mitigate through conventional corporate control mechanisms such as boards of directors and takeovers. This study examines whether external independent auditors could be employed as monitors and as bonding mechanisms to alleviate these agency conflicts. Using a broad sample of firms from eight East Asian economies, we document that firms are more likely to employ Big Five auditors when they are subject to the agency problem imbedded in their ownership structure. In addition, among East Asian auditees subject to the agency problem, Big Five auditors charge a higher fee and set a lower audit modification threshold while non-Big Five auditors do not. Taken together, this evidence suggests that Big Five auditors in emerging markets do have a corporate governance role.
format	Article
author	Fan, Joseph P. H. Wong, T.J.
author_facet	Fan, Joseph P. H. Wong, T.J.
author_sort	Fan, Joseph P. H.
title	Do external auditors perform a corporate governance role in emerging markets? Evidence from East Asia / Joseph P. H. Fan and T.J. Wong
title_short	Do external auditors perform a corporate governance role in emerging markets? Evidence from East Asia / Joseph P. H. Fan and T.J. Wong
title_full	Do external auditors perform a corporate governance role in emerging markets? Evidence from East Asia / Joseph P. H. Fan and T.J. Wong
title_fullStr	Do external auditors perform a corporate governance role in emerging markets? Evidence from East Asia / Joseph P. H. Fan and T.J. Wong
title_full_unstemmed	Do external auditors perform a corporate governance role in emerging markets? Evidence from East Asia / Joseph P. H. Fan and T.J. Wong
title_sort	do external auditors perform a corporate governance role in emerging markets? evidence from east asia / joseph p. h. fan and t.j. wong
publisher	Faculty of Accountancy & Accounting Research Institute (ARI)
publishDate	2003
url	http://ir.uitm.edu.my/id/eprint/13684/ http://ir.uitm.edu.my/id/eprint/13684/1/AJ_JOSEPH%20P.%20H.%20FAN%20MAR%2003.pdf
first_indexed	2023-09-18T22:50:10Z
last_indexed	2023-09-18T22:50:10Z
_version_	1777417491068223488

Do external auditors perform a corporate governance role in emerging markets? Evidence from East Asia / Joseph P. H. Fan and T.J. Wong

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