Interrelation of Capital Markets in the Context of Increased Audit Oversight in the European Union – Evidence on Third-Country Auditors

Mihaela Mocanu Octavian Iancu Ionescu
Additional contact information
Mihaela Mocanu Octavian Iancu Ionescu: Department of Accounting and Audit, The Bucharest University of Economic Studies, Bucharest, Romania. Norwich Business School, University of East Anglia, Norwich, United Kingdom.

Zagreb International Review of Economics and Business, 2020, vol. 23, issue 1, 71-80

Abstract: We identified a notable lack of academic literature on the issue of third-country auditors and the main contribution of our article is to address this gap. This research builds on adjacent audit oversight and capital markets literature and we extend this literature by providing evidence on third-country auditors. Specifically, we test the relationship between market capitalization and number of foreign IPOs of listed companies in representative EU countries (on one hand) and the existence of third-country auditors in those respective countries (on the other hand). Our research was performed in the second half of 2018 and is based on the latest data available. We have found that there are about 200 third-country auditors present in the public registers of audit oversight bodies in 11 EU countries. According to our network analysis, only European countries with a developed capital market have attracted third-country auditors. Most of the relationships of these developed EU capital markets are nurtured with non-EU capital markets that are at the same level of development (e.g. USA, Switzerland, Canada, Israel, and Australia). Our research hypotheses were validated: (1) the higher the market capitalization of a EU country, the higher the likelihood for the registration of third-country auditors; (2) the higher the number of foreign IPOs relative to the total IPOs on the stock exchange market, the higher the likelihood for the registration of third-country auditors. JEL Classification: M40, M41, M42, M48

Keywords: capital markets; audit oversight; third-country auditors; European Union (search for similar items in EconPapers)
Date: 2020
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hrcak.srce.hr/index.php?show=clanak&id_clanak_jezik=346044 (text/html)
Abstract only available on-line

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zag:zirebs:v:23:y:2020:i:1:p:71-80

Ordering information: This journal article can be ordered from
Zagreb International Review of Economics and Business, Faculty of Economics and Business, Trg J. F. Kennedy 6, 10000 Zagreb, Croatia.
http://www.efzg.hr/default.aspx?id=6045

DOI: 10.2478/zireb-2020-0005

Access Statistics for this article

Zagreb International Review of Economics and Business is currently edited by Soumitra Sharma

More articles in Zagreb International Review of Economics and Business from Faculty of Economics and Business, University of Zagreb Contact information at EDIRC.
Bibliographic data for series maintained by Jurica Šimurina ( this e-mail address is bad, please contact ).