Abstract
The purpose of this article is to examine the association between the firms ‘choice of external auditor and client firms’ characteristics. We develop a logit regression model to test the impact of firms’ characteristics on auditor choice decisions made by 27 listed companies in Tunisia during a period of 2005–2008. We find that firms with high investment opportunities and high level of organisational complexity are more likely to hire ‘top 15’ auditors. Further, firms with high leverage and high costs of disclosing proprietary information to competitors are less likely to hire ‘top 15’ auditors. The audit market in Tunisia presents an interesting field for the study of auditor choice, because there are a few empirical studies that examine auditor choice decisions in the emerging economies and because the simple dichotomous distinction between ‘Big’ and ‘not Big’ is unsuitable for the audit market in emerging countries. This study examines other determinants of auditor choice that have not been studied before in the Tunisian context and proposes a new typology of the audit quality in the Tunisian audit market.
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