Abstract
This study aimed to investigate the link between family firm and specialist auditor selection, the investor reaction in family and non family firms on specialist auditor selection, the influence of family CEO and hired CEO on specialist auditor selection, and the influence of divergence between cash flow right and control right on auditor specialist selection.This research applied purposive sampling method by using 108 companies that were selected from 534 companies in period 2009-2013. Logistic regression was implemented to 108 companies (i.e 540 firms-years). The findings of the research were family firms were more likely to appoint auditor with industry expertise than non family firm, family firms that switched audit partners from non-specialists to specialists had higher earning response coefficient (ERC) than nonfamily firms, positive association between family firms and industry specialist auditor selection came primarily from CEOs hired outside rather than family CEOs, among family firms, the likelihood of choosing industry specialist auditors increased with the divergence between control rights and cash flow rights.
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