The Effects of Management Demography on Auditor Choice and Earnings Quality: Evidence from China
AbstractRecent management literature shows that demographic characteristics of top management and corporate performance are related. Bamber et al. (2010) conclude that managers' voluntary disclosure styles are related to demographic characteristics. Also, Francis et al. (2008) demonstrate a negative relation between CEO reputation and earnings quality. We conjecture that, management demography affects auditor choice and earnings quality. Using a sample of 3,881 firm-year observations between 2001 and 2005 in China and controlling for board governance characteristics, we find that a chairperson with better reputation (i.e., holding titles) prefers well-known auditors on the national basis, regional basis and in the industry group. Furthermore, chairpersons with titles and longer tenure report earnings of higher quality. Our results are robust using different measures of auditor choice and earnings quality.
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Bibliographic InfoArticle provided by World Scientific Publishing Co. Pte. Ltd. in its journal Review of Pacific Basin Financial Markets and Policies.
Volume (Year): 15 (2012)
Issue (Month): 02 ()
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Web page: http://www.worldscinet.com/rpbfmp/rpbfmp.shtml
Find related papers by JEL classification:
- G1 - Financial Economics - - General Financial Markets
- G2 - Financial Economics - - Financial Institutions and Services
- G3 - Financial Economics - - Corporate Finance and Governance
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