Date of Award
2010
Degree Type
Thesis
Degree Name
Master of Philosophy (MPHIL)
Department
Accountancy
First Advisor
Professor CHAN Koon Hung
Second Advisor
Dr. Kenny Z. LIN
Abstract
India is one of the largest developing countries in the world. Although many issues and phenomena arising from its transitional economy are worthy of research from an accounting perspective, the Indian accounting market is a field that remains relatively unexplored in the extant literature. One of the institutional features of India is that while it is mandatory for public sector companies and banks to have joint auditors, their appointment is voluntary for other companies. In a thesis motivated by this and other institutional features and the absence of related accounting and auditing studies conducted in an Indian setting, I examine the relations of auditor type and firm ownership with the types of auditor opinions issued under the joint audit requirement.
Using a sample of 1,142 firm-year observations from the major Indian stock exchanges from 2006-2008, I develop an auditor opinion model to examine the relations between firm ownership, auditor type and auditor opinions under the joint-audit requirement that applies in India. Companies’ self-selection bias for auditors is also considered and corrected using the Heckman 2-step method. Based on the empirical results, I report as follows. First, Big 4 auditors are more likely to issue modified opinions than local Indian auditors. Second, the Indian government assumes a supervisory role rather than a collusive role and the joint-audit requirement is associated with a higher level of auditor reporting quality. Finally, companies audited by joint auditors are more likely to receive modified opinions than companies audited by a single auditor.
The findings provide evidence of the importance of understanding the pattern of auditor opinion in India and the incentives of joint auditors, as well as the influence this pattern has on auditor reporting quality in a transitional economy.
Keywords
Auditing, India
Copyright
The copyright of this thesis is owned by its author. Any reproduction, adaptation, distribution or dissemination of this thesis without express authorization is strictly prohibited.
Recommended Citation
Zou, T. (2010). Auditor type, firm ownership and auditor reporting under a joint audit requirement: Exploratory evidence from India (Master's thesis, Lingnan University, Hong Kong). Retrieved from http://dx.doi.org/10.14793/acct_etd.1