Corporate Governance and Auditor Choice Among Companies in GCC Countries
This thesis examines two separate studies—auditor change and auditor selection determinants among public listed companies in the Gulf Cooperation Council(GCC) for the period of 2005-2010. The models were developed using the frameworks of the agency theory, the managerial grid theory, the attraction-...
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| Format: | Thesis |
| Language: | English English |
| Published: |
2013
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| Subjects: | |
| Online Access: | https://etd.uum.edu.my/3809/1/s92494.pdf https://etd.uum.edu.my/3809/7/s92494.pdf https://etd.uum.edu.my/3809/ |
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| Summary: | This thesis examines two separate studies—auditor change and auditor selection determinants among public listed companies in the Gulf Cooperation Council(GCC) for the period of 2005-2010. The models were developed using the frameworks of the agency theory, the managerial grid theory, the attraction-selection-attrition framework and the information suppression hypothesis to examine the associations of three categories of determinants with the decisions of auditor change and selection. The first category of determinants is the corporate governance mechanisms: board of directors’ effectiveness score (board of directors independence, size, financial expertise, meetings, nationality, international experience and CEO duality), audit committee’s effectiveness score (audit committee independence, size, financial expertise, meetings, nationality and international experience), government ownership, family ownership, and domestic corporate ownership. The second category of determinant is the audit-specific characteristic: audit fee. The third category of determinants is the firm-specific characteristics: firm size, leverage, firm performance, and management change. For the auditor change model, the results show that the board of directors’ effectiveness score, family ownership, firm size, and leverage are significantly associated with the incidence of auditor change. As for the auditor selection model, the results indicate that the family ownership, domestic corporate ownership, audit fees, firm performance, and management change are significantly related to audit quality. This study finds that the economic and the behavioral issues are related to audit demand in GCC. Additionally, the study suggests that regulators, especially the GCC stock exchanges, should mandate companies to disclose all relevant information related to auditor change in a transparent and timely manner, and increase law enforcement to enhance good corporate governance practices. For companies, this study proposes that they should emphasize more on enhancing the role and the quality of the board of directors and the audit committee members, as they are involved in the both decisions of auditor change and selection. |
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