Auditor Selection: Impact of Audit Committees

Abstract

This article reports the results of a study designed to measure whether an SEC rule requiring audit committees might have an anticompetitive impact on auditor selection. Despite concerns expressed by the American Institute of Certified Public Accountants and others, the results of this study do not substantiate the contention that such a rule would favour Big‐Eight auditors. Rather, the results suggest that while movement toward Big‐Eight auditors is prevalent among NASD‐listed companies, the existence of an audit committee does not explain the displacement. It appears that such an SEC rule would not unfavourably impact the competition for audit services.

Citation

Cottell, P.G. and Rankin, L.J. (1989), "Auditor Selection: Impact of Audit Committees", American Journal of Business, Vol. 4 No. 1, pp. 33-38. https://doi.org/10.1108/19355181198900006