Does auditor choice matter to foreign investors? Evidence from foreign mutual funds worldwide

Julia Chou, Nataliya Zaiats, Bohui Zhang

Research output: Contribution to journalArticlepeer-review

11 Citations (Scopus)

Abstract

This study explores whether a firm's auditor choice affects its ability to access foreign equity capital. Using the equity holdings of 35,665 foreign mutual funds from 30 countries for the period 1998-2009, we find evidence that appointing a Big 4 auditor is associated with the increased level of foreign mutual fund ownership in firms. Our results are robust when conditioned on firm-level information asymmetries, country-level information disclosure quality, and when employing the Enron-Andersen fiasco as the natural experiment. Furthermore, appointing Big 4 auditors is particularly important for firms to attract foreign capital during the 2008 global financial crisis.

Original languageEnglish
Pages (from-to)1-20
Number of pages20
JournalJournal of Banking and Finance
Volume46
DOIs
Publication statusPublished - 1 Sep 2014

Keywords

  • 2008 Global financial crisis
  • Auditor choice
  • Enron-Andersen collapse
  • Foreign mutual funds

Fingerprint Dive into the research topics of 'Does auditor choice matter to foreign investors? Evidence from foreign mutual funds worldwide'. Together they form a unique fingerprint.

Cite this