Corporate ethics and auditor choice - international evidence

Muhammad Nurul Houqe*, Tony van Zijl, Keitha Dunstan, A. K M Waresul Karim

*Corresponding author for this work

Research output: Contribution to journalArticleResearchpeer-review

10 Citations (Scopus)


This paper examines whether firms' auditor choice reflects the strength of corporate ethics. Based on a sample of 132,853 firm year observations from forty-six countries around the globe during the period from 1998 to 2007 and controlling for a number of firm- and country-level factors, we find that firms in countries where "high corporate ethical values" prevail are more likely to hire a Big 4 auditor. We also find that the positive effect of home country corporate ethical values on the likelihood of hiring a high-quality auditor is reinforced by the extent of the firm's board size. These results establish an indirect link between corporate ethics and financial reporting quality through the firms' choice of auditor.

Original languageEnglish
Pages (from-to)57-65
Number of pages9
JournalResearch in Accounting Regulation
Issue number1
Publication statusPublished - 1 Apr 2015


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