Corporate Governance and Auditor Choice in Kuwait

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Meshari O. Al-Hajri

Abstract

Although auditor choice has been studied extensively in the audit literature,
research examining this issue in developing markets has been scarce thus far. The
objective of this study is to investigate the impact of corporate governance (CG)
on external auditor choice in the context of the small Kuwaiti emerging market.
Specifically, the present study uses both a survey and hand-collected 2012 fiscalyear
data pertinent to 53 Kuwaiti listed companies to examine whether firm’s
auditor choice is influenced by company’s board size, board independence,
directors’ shareholdings, Audit Committee (AC) size, and/or AC independence.
Using a logistic regression model, the study’s results reveal evidence of a
meaningful relation between auditor choice and AC size, company’s leverage,
and company’s belonging to the finance sector. These findings could be useful to
market regulators and corporate executives, especially in Kuwait, in improving
CG practices within corporations. The research findings should also be of value to
international researchers interested in carrying out related research.

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Keywords

Corporate governance
audit committee
board
audit independence
auditor choice
developing markets
Kuwait

Section
Articles
References
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