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Auditor Choice And Intitutionnel Investor Characteristics After The Enron Scandal In The French Context

Author

Listed:
  • Jamel Azibi

    (Centre de Recherche en Comptabilité du CNAM Paris - CNAM - Conservatoire National des Arts et Métiers [CNAM], ISG Tunis - ISG Tunis)

  • Hubert Tondeur

    (Centre de Recherche en Comptabilité du CNAM Paris - CNAM - Conservatoire National des Arts et Métiers [CNAM])

  • Mohamed Tahar Rajhi

    (FSEGT Tunisia - FSEGT Tunisia)

Abstract

This study examines the association between the quality of audit and the characteristics of institutional investors, using French data. After the Enron scandal, the perception of the Big 4 by French institutional investors changed. Our first hypothesis focuses on the perception French institutional investors to appointment of the Big 4. Our second hypothesis deals with the perception of the foreign institutional investors to choose one of the Big 4 auditors due to the lack of investor protection in France and the failure of Enron. We tested our hypotheses on a sample of 144 companies listed on SBF 250, using Worldscope data over the period 2000-2007. Empirical results show a negative and statistically significant link between the choices of one of Big 4 auditor by French institutional investors after the Enron scandal, whereas there is a positive and statistically insignificant link between the foreign institutional investor and the Big 4 appointment after 2002.

Suggested Citation

  • Jamel Azibi & Hubert Tondeur & Mohamed Tahar Rajhi, 2010. "Auditor Choice And Intitutionnel Investor Characteristics After The Enron Scandal In The French Context," Post-Print hal-00481076, HAL.
  • Handle: RePEc:hal:journl:hal-00481076 Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00481076
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    References listed on IDEAS

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    1. Kane, Gregory D. & Velury, Uma, 2004. "The role of institutional ownership in the market for auditing services: an empirical investigation," Journal of Business Research, Elsevier, vol. 57(9), pages 976-983, September.
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    3. Geraldine Broye & Laurent Weill, 2008. "Does leverage influence auditor choice? A cross-country analysis," Applied Financial Economics, Taylor & Francis Journals, pages 715-731.
    4. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    5. McConnell, John J. & Servaes, Henri, 1990. "Additional evidence on equity ownership and corporate value," Journal of Financial Economics, Elsevier, vol. 27(2), pages 595-612, October.
    6. Charles Piot, 2001. "Agency costs and audit quality: evidence from France," European Accounting Review, Taylor & Francis Journals, vol. 10(3), pages 461-499.
    7. DeAngelo, Linda Elizabeth, 1981. "Auditor size and audit quality," Journal of Accounting and Economics, Elsevier, vol. 3(3), pages 183-199, December.
    8. Paul M. Healy & Krishna G. Palepu, 2003. "The Fall of Enron," Journal of Economic Perspectives, American Economic Association, vol. 17(2), pages 3-26, Spring.
    9. Omrane Guedhami & Jeffrey A. Pittman, 2006. "Ownership Concentration in Privatized Firms: The Role of Disclosure Standards, Auditor Choice, and Auditing Infrastructure," Journal of Accounting Research, Wiley Blackwell, vol. 44(5), pages 889-929, December.
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