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Rotation of Auditing Firms and Political Costs: Evidence from Spanish Listed Companies
Author(s) -
GarcíaSánchez Isabel María,
GallegoÁlvarez Isabel,
RodríguezDomínguez Luis,
CuadradoBallesteros Beatriz,
GarcíaRubio Raquel
Publication year - 2014
Publication title -
international journal of auditing
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.583
H-Index - 21
eISSN - 1099-1123
pISSN - 1090-6738
DOI - 10.1111/ijau.12027
Subject(s) - audit , accounting , politics , business , external auditor , order (exchange) , finance , internal audit , political science , law
This study analyses a potential factor behind a change in auditor – that is, the minimization of political costs – given that the most important companies are more closely scrutinized and will attempt to prevent political costs resulting from unfavourable changes in the regulation of auditing activities. For that purpose, we analyse 82 Spanish non‐financial companies during the period from 1996 to 2009. The results obtained emphasize that the rotation of auditing firms takes place mainly when new regulations modifying or abolishing the current norms for auditing are discussed and enacted. These findings suggest that the real objective of these firms is to send out signals of good conduct to the public administration in order to avoid stricter regulation.