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The impact of mandatory versus voluntary auditor switches on stock liquidity in the Korean market

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The impact of mandatory versus voluntary auditor switches on stock liquidity in the Korean market. / Choi, Sunhwa; Choi, Youn-Sik ; Gul, Ferdinand et al.
In: British Accounting Review, Vol. 47, No. 1, 03.2015, p. 100-116.

Research output: Contribution to Journal/MagazineJournal articlepeer-review

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Choi S, Choi Y-S, Gul F, Lee W. The impact of mandatory versus voluntary auditor switches on stock liquidity in the Korean market. British Accounting Review. 2015 Mar;47(1):100-116. Epub 2014 Aug 12. doi: 10.1016/j.bar.2014.08.001

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Choi, Sunhwa ; Choi, Youn-Sik ; Gul, Ferdinand et al. / The impact of mandatory versus voluntary auditor switches on stock liquidity in the Korean market. In: British Accounting Review. 2015 ; Vol. 47, No. 1. pp. 100-116.

Bibtex

@article{6881bf3e7e95449b8f8935693a975e2b,
title = "The impact of mandatory versus voluntary auditor switches on stock liquidity in the Korean market",
abstract = "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.",
keywords = "Auditor switching, Stock liquidity , Auditor designation , Foreign ownership",
author = "Sunhwa Choi and Youn-Sik Choi and Ferdinand Gul and Woo-jong Lee",
year = "2015",
month = mar,
doi = "10.1016/j.bar.2014.08.001",
language = "English",
volume = "47",
pages = "100--116",
journal = "British Accounting Review",
issn = "0890-8389",
publisher = "Academic Press Inc.",
number = "1",

}

RIS

TY - JOUR

T1 - The impact of mandatory versus voluntary auditor switches on stock liquidity in the Korean market

AU - Choi, Sunhwa

AU - Choi, Youn-Sik

AU - Gul, Ferdinand

AU - Lee, Woo-jong

PY - 2015/3

Y1 - 2015/3

N2 - 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.

AB - 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.

KW - Auditor switching

KW - Stock liquidity

KW - Auditor designation

KW - Foreign ownership

U2 - 10.1016/j.bar.2014.08.001

DO - 10.1016/j.bar.2014.08.001

M3 - Journal article

VL - 47

SP - 100

EP - 116

JO - British Accounting Review

JF - British Accounting Review

SN - 0890-8389

IS - 1

ER -