TY - JOUR
T1 - Does auditor choice matter to foreign investors? Evidence from foreign mutual funds worldwide
AU - Chou, Julia
AU - Zaiats, Nataliya
AU - Zhang, Bohui
PY - 2014/9/1
Y1 - 2014/9/1
N2 - 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.
AB - 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.
KW - 2008 Global financial crisis
KW - Auditor choice
KW - Enron-Andersen collapse
KW - Foreign mutual funds
UR - http://www.scopus.com/inward/record.url?scp=84902506415&partnerID=8YFLogxK
U2 - 10.1016/j.jbankfin.2014.04.005
DO - 10.1016/j.jbankfin.2014.04.005
M3 - Article
SN - 0378-4266
VL - 46
SP - 1
EP - 20
JO - Journal of Banking and Finance
JF - Journal of Banking and Finance
ER -