THE ROLE OF THE BOARD OF DIRECTORS IN HIRING THE AUDIT FIRM: EMPIRICAL EVIDENCE FROM BRAZIL
DOI:
https://doi.org/10.17524/repec.v7i3.921Keywords:
Corporate governance, auditing, board of directors.Abstract
The purpose of this article is to investigate if there is a relationship between the characteristics of the board of directors and the type of independent audit firm engaged by companies listed on the São Paulo Stock Exchange (BM&FBovespa). We considered three board characteristics: independence, CEO/chair separation and size. In turn, for the audit firms we considered two characteristics: size and level of specialization in the client company’s segment, based on two measures (market strategy and market share). The data were obtained from the websites of the companies, the Brazilian Securities Commission (CVM) and Economática, covering the period from 1998 to 2006. The results indicate that CEO/chair separation is associated with larger audit firms (Big N) and specialist firms. These results contribute to the discussion on how the corporate governance structure influences the engagement of the auditor, improving the understanding of the role of the board of directors in monitoring listed Brazilian companies.References
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