Caste Primacy of Auditor Choice and Independence
Document Type
Article
Department or Administrative Unit
Accounting
Publication Date
10-30-2020
Abstract
We examine the caste affiliation of the auditor selected by the corporate boards of directors of Indian firms. The history of the caste system in India is one of discrimination and inequity. The constitutionally mandated quota system in the public sector has shown improvements, but has not trickled into private sector leadership. We find that nearly 96% of Indian corporate boards are dominated by a single caste. The auditing firms are also dominated by the forward castes. Lastly, we find that when boards are dominated by one caste, they select an auditing firm that is also affiliated with that same caste. We examine the board and auditor relationship because they both play an important monitoring role in corporate governance. However, auditor effectiveness can be undermined when there is a lack of independence between them and the firm. The existence of a strong shared social network like caste affiliation compromises that independence.
Recommended Citation
Dayanandan, A., Donker, H., Nofsinger, J., & Prasad, R. (2020). Caste Primacy of Auditor Choice and Independence. The International Journal of Accounting, 55(04), 1-32. https://doi.org/10.1142/s1094406020500171
Journal
The International Journal of Accounting
Comments
This article was originally published in The International Journal of Accounting. The full-text article from the publisher can be found here.
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