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The impact of mandatory versus voluntary auditor switches on stock liquidity: some Korean evidence
journal contribution
posted on 2015-03-01, 00:00 authored by S Choi, Y S Choi, Ferdinand GulFerdinand Gul, W J LeeUsing Korean listed firms subject to the auditor "designation rule", this paper shows that (1) firms that switch auditors exhibit lower stock liquidity than firms that do not switch auditors, and (2) the negative liquidity effect of auditor switches is concentrated in firms that switch to low-quality auditors. Meanwhile, firms that switch auditors under the auditor designation system do not exhibit lower stock liquidity, consistent with audit designation mitigating the concerns about audit quality deterioration around auditor changes. Furthermore, we find that foreign ownership has a mitigating impact on the negative relation between auditor switches and stock liquidity, suggesting that investors are less concerned about auditor switches when an alternative monitoring mechanism exists.
History
Journal
British accounting reviewVolume
47Issue
1Pagination
100 - 116Publisher
ElsevierLocation
Amsterdam, The NetherlandsPublisher DOI
ISSN
1095-8347eISSN
1095-8347Language
engPublication classification
C1.1 Refereed article in a scholarly journal; C Journal articleCopyright notice
2014, ElsevierUsage metrics
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