Ownership Concentration, Choice of Auditors, and Firm Performance: Evidence from the MENA Region
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Omar Farooq
Using a large dataset of ownership concentration from the MENA region during the period between 2004 and 2008, we document that ownership concentration does not have a significant impact on firm performance. It is, rather, the way concentrated firms govern themselves that determine their performance. We argue that concentrated ownership firms, being aware of the agency problems embedded in their ownership structure, appoint one of the big-four auditors as their external auditor to signal to the market that they are disclosing reliable information. Our results also show a significantly positive relationship between ownership concentration and the choice of auditor. We further show that for a given level of ownership concentration, appointing one of the big-four auditors leads to superior firm performance.
©2012 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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- Do School Incentives and Accountability Measures Improve Skills in the Middle East and North Africa? The Cases of Jordan and Tunisia
- Risk Transfer Arrangements as a Hedging Device with Evidence from the Kuwaiti Dinar-British Pound Market
- Ownership Concentration, Choice of Auditors, and Firm Performance: Evidence from the MENA Region
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Articles in the same Issue
- Article
- Labor Market Dynamics in Tunisia: The Issue of Youth Unemployment
- Do School Incentives and Accountability Measures Improve Skills in the Middle East and North Africa? The Cases of Jordan and Tunisia
- Risk Transfer Arrangements as a Hedging Device with Evidence from the Kuwaiti Dinar-British Pound Market
- Ownership Concentration, Choice of Auditors, and Firm Performance: Evidence from the MENA Region
- Testing Factor Pricing Models in Tunisia: Macroeconomic Factors vs. Fundamental Factors
