Firm Ownership Type, Earnings Management and Auditor Relationships: Evidence from India

Using data on Indian listed companies for 2005, the paper examines how firm ownership relates to auditor choice. More specifically, we test several hypotheses about the links between firm ownership, auditor relationships and earnings management. The results indicate that firms having high discretionary accruals are less likely to be audited by domestic entities. The analysis also suggests that domestic auditors are less likely to be preferred by both foreign and Indian private corporates.