Graduation Year
2018
Date of Submission
4-2018
Document Type
Open Access Senior Thesis
Degree Name
Bachelor of Arts
Department
Economics-Accounting
Reader 1
Andrew Finley
Rights Information
2018LatishaRShah
Abstract
Previous studies have concluded that mandatory audit firm rotation (MAFR) has not been successful in controlling the outcomes of the auditor-client relationship. Additionally, the literature concludes that high institutional ownership enhances audit quality through monitoring the management-auditor relationship. This paper hypothesizes that better corporate governance in terms of high institutional ownership percentage will enhance audit quality during a MAFR regime. Since countries that have implemented MAFR in the past have their data in their local languages, I use the special case of Arthur Andersen clients based in the US as my treatment group. I carry out a descriptive statistical analysis and run linear OLS regressions with discretionary accruals as a proxy for audit quality as my dependent variable. Results suggest that the percentage of institutional ownership does not have a significant impact on audit quality in a MAFR regime.
Recommended Citation
Shah, Latisha, "Institutional Ownership in Relation to the Mandatory Audit Firm Rotation Rule and its Effect on Audit Quality" (2018). CMC Senior Theses. 1878.
https://scholarship.claremont.edu/cmc_theses/1878
