The impact of mandatory versus voluntary auditor switches on stock liquidity: Some Korean evidence

Sunhwa Choi; Youn-Sik Choi; Ferdinand A. Gul; Woo-Jong Lee

doi:10.1016/j.bar.2014.08.001

Back

The impact of mandatory versus voluntary auditor switches on stock liquidity: Some Korean evidence

Journal article

Peer reviewed

The impact of mandatory versus voluntary auditor switches on stock liquidity: Some Korean evidence

Sunhwa Choi, Youn-Sik Choi, Ferdinand A. Gul and Woo-Jong Lee

The British Accounting Review, Vol.47(1), pp.100-116

2015

DOI: https://doi.org/10.1016/j.bar.2014.08.001

Files and links (1)

url

https://doi.org/10.1016/j.bar.2014.08.001View

Published Version

Abstract

Auditor designation

Auditor switching

Foreign ownership

Stock liquidity

Using Korean listed firms subject to the auditor “designation rule”, this paper shows that (1) firms that switch auditors exhibit lower stock liquidity than firms that do not switch auditors, and (2) the negative liquidity effect of auditor switches is concentrated in firms that switch to low-quality auditors. Meanwhile, firms that switch auditors under the auditor designation system do not exhibit lower stock liquidity, consistent with audit designation mitigating the concerns about audit quality deterioration around auditor changes. Furthermore, we find that foreign ownership has a mitigating impact on the negative relation between auditor switches and stock liquidity, suggesting that investors are less concerned about auditor switches when an alternative monitoring mechanism exists.

Details

Title: The impact of mandatory versus voluntary auditor switches on stock liquidity: Some Korean evidence
Authors: Sunhwa Choi (Author) - Lancaster University
Youn-Sik Choi (Author) - Kyung Hee University, Republic of Korea
Ferdinand A. Gul (Author) - Monash University Malaysia
Woo-Jong Lee (Corresponding Author) - Hong Kong Polytechnic University
Publication details: The British Accounting Review, Vol.47(1), pp.100-116
Publisher: Academic Press
DOI: 10.1016/j.bar.2014.08.001
ISSN: 1095-8347
Organisation Unit: School of Business and Creative Industries; University of the Sunshine Coast, Queensland
Language: English
Record Identifier: 99679190402621
Output Type: Journal article

Metrics

23 Record Views

10 Times Cited - Web of Science

InCites Highlights

These are selected metrics from InCites Benchmarking & Analytics tool, related to this output

Collaboration types: Domestic collaboration; International collaboration
Web Of Science research areas: Business, Finance

UN Sustainable Development Goals (SDGs)

This output has contributed to the advancement of the following goals:

Source: InCites