Title

Determinants and market valuation of the decision to audit or review: Evidence from Taiwan

Document Type

Article

Publication Date

12-1-2017

Abstract

Using observations of public companies in Taiwan between 2008 and 2012, this study examines the determinants of demand for different assurance services from the perspectives of agency cost, information need, and quality of corporate governance. Our results indicate that the demand for audit assurance is higher in the presence of higher agency costs between controlling and non-controlling shareholders and higher agency costs of debts. We also find that companies with stronger capital need are more likely to have their interim financial statements audited. The quality of corporate governance is found to have a positive effect on the decision to choose audit assurance. Finally, our empirical results demonstrate audited information is more value relevant than reviewed information. This suggests that firms can potentially enjoy benefits from audited information as the market will rely more on their financial information in making investment-related decisions.

DOI

10.1016/j.jcae.2017.09.004

Publication Title

Journal of Contemporary Accounting and Economics

Volume Number

13

Issue Number

3

First Page

209

Last Page

224

ISSN

18155669

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