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Ownership Concentration, Choice of Auditors, and Firm Performance: Evidence from the MENA Region

Listed author(s):
  • Farooq Omar

    (Al Akhawayn University)

  • El Kacemi Youssef

    (Al Akhawayn University)

Registered author(s):

    Using a large dataset of ownership concentration from the MENA region during the period between 2004 and 2008, we document that ownership concentration does not have a significant impact on firm performance. It is, rather, the way concentrated firms govern themselves that determine their performance. We argue that concentrated ownership firms, being aware of the agency problems embedded in their ownership structure, appoint one of the big-four auditors as their external auditor to signal to the market that they are disclosing reliable information. Our results also show a significantly positive relationship between ownership concentration and the choice of auditor. We further show that for a given level of ownership concentration, appointing one of the big-four auditors leads to superior firm performance.

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    File URL: https://www.degruyter.com/view/j/rmeef.2011.7.issue-2/1475-3693.1303/1475-3693.1303.xml?format=INT
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    Article provided by De Gruyter in its journal Review of Middle East Economics and Finance.

    Volume (Year): 7 (2011)
    Issue (Month): 2 (September)
    Pages: 1-17

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    Handle: RePEc:bpj:rmeecf:v:7:y:2011:i:2:n:4
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    1. Mike Burkart & Fausto Panunzi & Andrei Shleifer, 2003. "Family Firms," Journal of Finance, American Finance Association, vol. 58(5), pages 2167-2202, October.
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    8. Ronald C. Anderson & David M. Reeb, 2003. "Founding-Family Ownership and Firm Performance: Evidence from the S&P 500," Journal of Finance, American Finance Association, vol. 58(3), pages 1301-1327, 06.
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    10. Pradeep K. Chhibber & Sumit K. Majumdar, 1998. "Does it pay to venture abroad? Exporting behavior and the performance of firms in Indian industry," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 19(2), pages 121-126.
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