This paper investigates the role of outside members of the board of directors in the choice of external auditor for property‐liability insurance companies. Consistent with our hypothesis that we derive from theories of both corporate governance and audit quality, we find that the likelihood of an insurer employing a brand name auditor that specializes in the insurance industry is increasing in the percentage of the members of the board of directors that are considered outsiders. However, we do not find a significant association between board composition and the choice of using a nonspecialist brand name (Big 6) auditor and a nonbrand name auditor, suggesting specialization is considered to be important, but not brand name in this setting.
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Research Article| March 01 2001
Board Independence and Audit‐Firm Type
Mark S. Beasley, Associate Professor;
Online ISSN: 1558-7991
Print ISSN: 0278-0380
American Accounting Association
AUDITING: A Journal of Practice & Theory (2001) 20 (1): 97–114.
Mark S. Beasley, Kathy R. Petroni; Board Independence and Audit‐Firm Type. AUDITING: A Journal of Practice & Theory 1 March 2001; 20 (1): 97–114. https://doi.org/10.2308/aud.2001.20.1.97
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