2.12. Audit Quality and Private Finnish Firms

Public examination of a doctoral dissertation in the field of economics
Doctoral candidate: M.Sc.Econ Jukka Karjalainen
Time and venue: 1.12.2011 at 12 noon, ML3, Medistudia, Kuopio Campus

Despite the economic importance of private firms, most of the auditing literature focuses on public firms, primarily in the common law environments. The literature on audit quality is largely limited to an environment where the demand for accounting quality is high and auditors have strong incentives to maintain their independence. Therefore, the existing evidence on audit quality may not be directly applicable in environments where the demand for accounting quality is lower and auditors face lower litigation and reputation risks.

Using the research setting of private Finnish firms, the purpose of this dissertation is to address this limitation and enhance our understanding of the relevance of audit quality in private firms through four related articles. The dissertation provides evidence of the demand for audit quality by lenders and different types of private firm owners, as well as evidence of audit partner industry specialization as a source for audit quality differentiation in the audit market of private firms.

For private firms, practical implications emerging from the results relate to choice of a credible auditor for fulfilling monitoring needs of various stakeholders and resulting benefits in terms of lower cost of capital. In addition, the results provide insight into the current regulatory debate on the requirement to disclose audit partner identity. The results suggest that in the presence of lower litigation and reputation risks this requirement can provide auditors an additional incentive to contribute to audit quality.

The doctoral dissertation of M.Sc.Econ Jukka Karjalainen, entitled Audit Quality and Private Finnish Firms will be examined at the Faculty of Social Sciences and Business Studies. The opponent in the public examination will be Professor Lasse Niemi of the Aalto University, and the custos will be Professor Mervi Niskanen of the University of Eastern Finland. The public examination will be held in English.

Photo available for download at http://www.uef.fi/vaitoskuvat.

Contact: Jukka Karjalainen, 050 536 3689 or 040 355 3519, jukka.karjalainen(at)uef.fi

Publishing year: 2011

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