Perceived independence or knowledge spillovers: the demand for non-audit services among family businesses

Bennet Schierstedt, Marisa Henn and Anja Müsch

International Journal of Management Practice, 2021, vol. 14, issue 1, 1-34

Abstract: This study investigates the impact of family involvement in top management teams, family firms' life cycle stages, and family firm identification on family firms' demand for non-audit services (NAS). Based on a hand-collected panel dataset including 1,148 German firm-year observations made by 162 family firms, we show that family involvement in top management teams is negatively related to the demand for NAS, resulting in less financial bonding with the incumbent auditor. Moreover, later life cycle stage and high family firm identification positively drive the demand for NAS, which jeopardises external stakeholders' perceptions of auditor independence. By moderating auditor characteristics, we show that if the incumbent auditor belongs to the Big Four, family managers' NAS purchases are similar to those of non-family managers. Moreover, the relationship between high family firm identification and the demand for NAS becomes even stronger when the incumbent auditor belongs to the Big Four.

Keywords: non-audit services; NAS; socioemotional wealth; SEW; family firms; panel analysis; auditing. (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijmpra:v:14:y:2021:i:1:p:1-34

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