Political Connections, Directors' Status and Auditor Choice: Evidence from China

For the past few years, the research about the relationship between political connections and accounting and auditing really become a hot topic. In the research of auditor choice, political connection could play an important role. This paper investigates the different effects of some kinds of political connections on the auditor choice. Using data on Chinese listed firms from 2007 to 2010, It is found that the listed firms with politically connected directors, executive directors, chairman of the board prefer to choose the "non-top 10" accounting firms, and the same situation can be find in the executive directors who have political connections belong to party and government organizations. It is also found that the listed firms with politically connected independent directors and CEO (Chief Executive Officer) do not have significant effects on the auditor choice, so do the executive directors who do not have party and government organizations political connections.