The Risk of Fraud in Family Firms: Assessments of External Auditors

摘要: There is a dearth of business ethics research on family firms, despite the importance such firms to US economy (Vazquez in J Bus Ethics, 2016. doi: 10.1007/s10551-016-3171-1 ). We answer Vazquez’s (2016) call examine intersection family-firm and ethics, by investigating whether external auditors assess higher risk fraud firms. test contradictory predictions two dominant theoretical perspectives research—entrenchment theory alignment theory. conduct an experiment with highly experienced audit professionals, who make client acceptance decisions for versus non-family different strength corporate governance: strong weak committees (ACs). find that as than consistent entrenchment Auditors are also less likely recommendations The AC moderates effect, whereby ACs have highest be least desirable clients. Our findings suggest perceive more severe agency conflicts present theory, according which members may behave opportunistically extract rents potentially expropriate firm’s resources at expense minority shareholders.