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Compliance with International Financial Reporting Standards and auditor choice: New evidence on the importance of the statutory audit

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  • Hodgdon, Christopher
  • Tondkar, Rasoul H.
  • Adhikari, Ajay
  • Harless, David W.

Abstract

We examine the impact of auditor choice on IFRS compliance under the assumption of strict exogeneity of auditor choice. Our results reveal that compliance is positively related to auditor choice after controlling for firm size, profitability, leverage, degree of international diversification, and whether a firm has a U.S. listing or was audited according to International Standards of Auditing. We also find that auditor choice is positively related to firm compliance when controlling for unmeasured, firm-specific effects. The results of our study reinforce the importance of developing institutional mechanisms (e.g., enforcement, auditing, or corporate governance structures) to encourage compliance with IFRS.

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  • Hodgdon, Christopher & Tondkar, Rasoul H. & Adhikari, Ajay & Harless, David W., 2009. "Compliance with International Financial Reporting Standards and auditor choice: New evidence on the importance of the statutory audit," The International Journal of Accounting, Elsevier, vol. 44(1), pages 33-55, March.
    • Handle: RePEc:eee:accoun:v:44:y:2009:i:1:p:33-55
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    18. Vieru, Markku & Schadewitz, Hannu, 2010. "Impact of IFRS transition on audit and non-audit fees: evidence from small and medium-sized listed companies in Finland," MPRA Paper 44664, University Library of Munich, Germany.
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    22. Enas Abdullah Hassan, 2020. "The Economic Consequence Of International Financial Reporting Standards Adoption: Evidence From Corporate Tax Avoidance In Gulf States," Accounting & Taxation, The Institute for Business and Finance Research, vol. 12(1), pages 45-65.
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    24. Andreea Paula Dumitru, 2014. "Perceptions Of Professional Accountants On The Costs And Benefits Of Implementing Ias/Ifrs In Romania," Global Economic Observer, "Nicolae Titulescu" University of Bucharest, Faculty of Economic Sciences;Institute for World Economy of the Romanian Academy, vol. 2(2), pages 66-75, November.

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