Publication
Title
The demand for auditor services in wholly family-owned private firms : the moderating role of generation
Author
Abstract
Former audit demand studies generally consider wholly family-owned private firms as a homogeneous group of firms that incur minimal agency costs. Family firm literature, however, argues that these firms might incur significant agency costs as well and we therefore examine audit demand in this particular type of firm. As we examine private family firms from the USA, which have no audit requirement, we broaden the concept of audit demand to the demand for auditor services, which encompasses audits, reviews and compilations. Consistent with former audit demand studies, we hypothesise a negative association between management ownership and the demand for auditor services, but only for first-generation private family firms. We hypothesise that this relation turns positive for subsequent generation private family firms due to entrenching behaviour caused by weakened altruistic feelings between the family shareholders. Our results support this hypothesis, but only regarding the demand for reviews and compilations. Therefore, our findings suggest that reviews and compilations seem to be sufficient and more cost-effective in this specific context to mitigate shareholdermanager agency costs compared to more expensive audits. Moreover, results suggest that the level of shareholderdebtholder agency costs do seem to be a driver for the demand for audits.
Language
English
Source (journal)
Accounting and business research. - London, 1970, currens
Publication
London : 2015
ISSN
0001-4788
Volume/pages
45:1(2015), p. 1-26
ISI
000345565300001
Full text (Publisher's DOI)
Full text (publisher's version - intranet only)
UAntwerpen
Faculty/Department
Research group
Publication type
Subject
External links
Web of Science
Record
Identification
Creation 13.03.2015
Last edited 17.09.2017
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