Proprietary information spillovers and supplier choice: : evidence from auditors

• Autores: Daniel Aobdia
• Localización: Review of Accounting Studies, ISSN-e 1573-7136, Vol. 20, Nº. 4, 2015, págs. 1504-1539
• Idioma: inglés
• Texto completo no disponible (Saber más ...)
• Resumen

  • I test whether information spillover concerns are a causal determinant of supplier choice and whether suppliers are a conduit for these spillovers. Using the audit setting, where firms must use the services of an auditor to certify their financial statements, I document a reluctance of rival firms to engage the same auditor due to information-spillover concerns. This reluctance mitigates the benefits of industry specialization by auditors shown in prior literature. Using several quasi-natural experiments that exogenously vary the information-spillover costs of sharing the same auditor, while keeping the benefits of industry specialization constant, I find that same-industry rivals become less (more) likely to share the same auditor when the costs of information spillovers increase (decrease). I also find that firms initially sharing the same auditor make less similar decisions following an exogenous shock that compels them to switch auditors, suggesting that a legitimate reason may exist for client concerns about information spillovers