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Please use this identifier to cite or link to this item: http://hdl.handle.net/1942/18084

Title: The demand for auditor services in wholly family-owned private firms: the moderating role of generation
Authors: CORTEN, Maarten
STEIJVERS, Tensie
LYBAERT, Nadine
Issue Date: 2015
Publisher: ROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD
Citation: ACCOUNTING AND BUSINESS RESEARCH, 45 (1), p. 1-26
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 shareholder-manager agency costs compared to more expensive audits. Moreover, results suggest that the level of shareholder-debtholder agency costs do seem to be a driver for the demand for audits.
Notes: [Corten, Maarten; Steijvers, Tensie; Lybaert, Nadine] Hasselt Univ, KIZOK Res Ctr, Hasselt, Belgium.
URI: http://hdl.handle.net/1942/18084
DOI: 10.1080/00014788.2014.959462
ISI #: 000345565300001
ISSN: 0001-4788
Category: A1
Type: Journal Contribution
Validation: ecoom, 2015
Appears in Collections: Research publications

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