Back to Search Start Over

The Role of Auditing in Small, Private Family Firms: Is It About Quality and Credibility?

Authors :
Jukka Karjalainen
Mervi Niskanen
Jyrki Niskanen
Source :
Family Business Review. 23:230-245
Publication Year :
2010
Publisher :
SAGE Publications, 2010.

Abstract

The authors present empirical evidence of how family ownership and control affect the demand for audit quality measured by audit firm size in a sample of small private firms. The results indicate that family-held or -controlled firms are less likely to use Big 4 auditors than nonfamily firms and that an increase in family ownership decreases the likelihood of a Big 4 audit. The results imply that the less concentrated family ownership is, the more need there is for outside control mechanisms because of higher agency costs. The results imply that family influence increases firms’ incentives to employ Big 4 audit firms, thereby increasing the credibility of their financial statements vis-à-vis outside stakeholders.

Details

ISSN :
17416248 and 08944865
Volume :
23
Database :
OpenAIRE
Journal :
Family Business Review
Accession number :
edsair.doi...........e604c1cd79c65622d84e9b84d034be92
Full Text :
https://doi.org/10.1177/0894486510374456