What does this research mean for the field?

Higher leverage, a greater number of accounting-based debt covenants, and larger firm size increase the probability that a firm will voluntarily hire external auditing to mitigate agency conflicts. Novelty: ClaimNovelty.INCREMENTAL. Consensus alignment: ConsensusAlignment.NEUTRAL.

What question did this study set out to answer?

The study aims to explore factors influencing firms' decisions to hire external auditors, focusing on agency theory.

March 18, 2026The Accounting Review

The Demand for External Auditing: Size, Debt and Ownership Influences.

View Full Paper

Ask AI

Bookmark

Authors

CCChee W. ChowUniversity of North Carolina at Chapel Hill

Discussion

Member takes

Implication

Analysis shows how firm size and debt influence external auditing demand, implying key managerial insights.

Key Points

The study aims to explore factors influencing firms' decisions to hire external auditors, focusing on agency theory.
Analyzed firm characteristics related to external auditing demand using agency theory framework.
Sample included 165 NYSE and OTC firms from 1926.
Conducted univariate and multivariate tests to assess relationships between variables.
Supported impacts of leverage and accounting-based debt covenants on external auditing demand.
Moderate support found for the effect of firm size on auditing decisions.
Manager ownership's influence could not be reliably tested due to data limitations.

Cite This Study

Chee W. Chow (1982) studied this question.

synapsesocial.com/papers/69ba43b64e9516ffd37a52ce https://doi.org/10.2308/tar-4481657

View Full Paper

Ask AI

Bookmark

The Demand for External Auditing: Size, Debt and Ownership Influences.

Discussion

Member takes

Implication

Key Points

Cite This Study

The Demand for External Auditing: Size, Debt and Ownership Influences.

Discussion

Member takes

Implication

Key Points

Cite This Study

Also Consider

Also Consider