Political Connection and the Demand for Industry Specialist Auditors

  title={Political Connection and the Demand for Industry Specialist Auditors},
  author={Liz Brooks},
  journal={Accounting and Finance Research},
  • L. Brooks
  • Published 2016
  • Economics
  • Accounting and Finance Research
Prior literature suggests that political connected firms are more likely to be associated with lower financial reporting quality than non-political connected firms. Industry specialist auditors have a higher reputation to provide high quality audit. Thus, I hypothesize that political connected firms have a higher demand for industry specialists in order to minimize the agency costs associated with political connection. Consistent with my prediction, I find a significant positive association… Expand

Tables from this paper

Political connections and cost stickiness: The moderating role of product market competition
The impact of political connections on business organizations, has been the subject of interest for many researches throughout the world. Since executive and non-executive directors, with politicalExpand


Auditor Choice in Politically Connected Firms
We extend recent research on the links between political connections and financial reporting by examining the role of auditor choice. Our evidence that public firms with political connections areExpand
Political connections and the cost of equity capital
Using propensity score matching models, it is found that politically connected firms enjoy a lower cost of equity capital than their non-connected peers, and that political connections are more valuable for firms with stronger ties to political power. Expand
Politicians , Firms and the Political Business Cycle : Evidence from France
This paper tests whether politically connected CEOs alter their hiring and firing decisions in order to help incumbent politicians in their re-election efforts. We study this question in the contextExpand
Political institutions, connectedness, and corporate risk-taking
We investigate the impact of political institutions on corporate risk-taking. Using a large sample of non-financial firms from 77 countries covering the period from 1988 to 2008, we find that soundExpand
Industry Specialization by Global Audit Firm Networks
ABSTRACT: This study investigates the role of global audit firm networks in the market for audit services. Underlying theory suggests that there are benefits from the use of network structures, whichExpand
Political Connections and Corporate Bailouts
We analyze the likelihood of government bailouts of 450 politically connected firms from 35 countries during 1997‐2002. Politically connected firms are significantly more likely to be bailed out thanExpand
Corporate Political Connections and Tax Aggressiveness
This study investigates the relation between corporate political connections and tax aggressiveness. We study a broad array of corporate political activities, including the employment of connectedExpand
Does Auditor Industry Specialization Matter? Evidence from Market Reaction to Auditor Switches
Numerous capital market studies have investigated the stock market's reaction to firms switching to and from brand name auditors (Big 8/6/5/4 auditors). However, audit firm brand name is only oneExpand
The Quality of Accounting Information in Politically Connected Firms
We document that the quality of earnings reported by politically connected firms is significantly poorer than that of similar non-connected companies. Our results are not due to firms with ex-anteExpand
The Politics of Government Investment
This paper investigates the relation between corporate political connections and government investment. We study various forms of political influence, ranging from passive connections between firmsExpand