Title: Auditor choice and institutional investor characteristics after the Enron scandal in the French context

Authors: Jamel Azibi, Hubert Tondeur, Mohamed Tahar Rajhi

Addresses: Conservatoire National des Arts et Metiers (CNAM), Paris and ISG Tunis, 18 Rue Legrand 94120 Fontenay sous Bois Paris, France. ' CNAM – INTEC, 40 rue des Jeuneurs 75002 Paris, France. ' Faculte des Sciences Economiques et de Gestion de Tunis Elmanar, B.P. 248 El Manar II 2092 Tunis, Tunisia

Abstract: This study examines the association between the quality of audit and the characteristics of institutional investors, using French data. After the Enron scandal, the perception of the Big 4 by French institutional investors changed. Our first hypothesis focuses on the relation between French institutional investors and the choice of Big 4 auditors. Our second hypothesis deals with the perception of the foreign institutional investors to choose one of the Big 4 auditors due to the lack of investor protection in France and the failure of Enron. We tested our hypotheses on a sample of 144 companies listed on SBF 250, obtained from Worldscope data between 2000 and 2007. Empirical results show a negative and statistically significant link between the choices of one of Big 4 auditor by French institutional investors after the Enron scandal, whereas there is a positive and statistically insignificant link between the foreign institutional investor and the Big 4 appointment after 2002.

Keywords: audit quality; auditor choice; institutional investors; Enron scandal; France; auditing.

DOI: 10.1504/IJEA.2011.038962

International Journal of Economics and Accounting, 2011 Vol.2 No.1, pp.32 - 52

Published online: 21 Oct 2014 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article