The determinants of auditor selection in terms of firm and IPO characteristics : evidence from BIST

This study mainly aims to measure the impact of firm characteristics and ipo characteristics on external auditor selection, by examining a sample from BIST firms over the period 2009 to 2013. It was investigated that the firm age, firm size, foreign ownership, international diversification, market to book and total asset turnover are positively associated with auditor selection in terms of Big 4-Non Big 4 diversification. The empirical evidence contradicts the hypothesis that sales growth, loss, ROA, leverage and liquidity have an impact on external auditor selection. Also it was determined that the firms which are in the corporate governance index prefer work with Big 4, but watchlist companies don't. The IPO characteristics such as; ipo age, issue size, prestigious underwriter are positively associated with auditor selection (Big 4/Non-Big 4). The results of this research indicate that there is a high correlation between firm age and ipo age. In addition to all, our results suggest that some of firm characteristics and ipo characteristics serve as a signaling device that enhances auditor selection.