دانلود رایگان مقاله انگلیسی تاثیر اتحادیه های کارگری بر انتخاب حسابرس خارجی و حوزه حسابرسی- تیلور و فرانسیس 2017

ABSTRACT

We examine whether labour unions influence external auditor selection and audit scope. As a major user group of financial information, labour unions likely demand financial information of high quality and thus high-quality audits. As a union’s request for wage increases is likely strong when a firm is performing well, management facing wage negotiations with the labour union has incentives to manipulate earnings downward and may therefore prefer auditors who allow more discretion. Using union data unique to Korea during 2005–2008, we find that firms with a stronger labour union tend to choose higher-quality auditors (i.e. Big N or industry specialist auditors). We also find that unionization is negatively (positively) associated with positive (negative) abnormal audit fees and audit hours, and the effects are more pronounced when the union is stronger and more active. Given that departures from normal audit fees and audit hours in either direction arguably impair audit quality, this finding is consistent with our prediction of unions’ demand for high-quality audits. Overall, our findings suggest that labour unions play an important role in determining audit quality.

V. Conclusion

This article investigates the association between unions and external audits, particularly the choice of Big 4 or industry specialist auditors. We also test the association between unions and abnormal audit fees and audit hours. To gain ascendancy in wage negotiations with management, unions try to obtain quality information, while management is reluctant to share inside information. We posit that strong unions will more successfully push management to select high-quality auditors and to demand highquality audit services.

Using Korean unique data, we find that unions affiliated with Minju (the strongest unions) positively affect the choice of Big 4/industry specialist auditor, while unions without any affiliation (the weakest) negatively affect this choice. Unions associated with Hanguk (modest unions) have no impact on the choice of Big 4 auditor/industry specialist.

Moreover, Minju reduces (increases) positive (negative) abnormal audit fees and hours. These results hold even after we control for firm characteristics using a PSM. Hanguk also generally reduces abnormal audit fees and hours, although the influence is not as strong as Minju. The overall results suggest that the strongest unions increase audit quality, while the most management-friendly unions, the nonaffiliated ones, do not. Hanguk in some sense increases audit quality, but less than Minju.