<abstract xmlns="http://www.w3.org/1999/xhtml"><p>We identified a notable lack of academic literature on the issue of third-country auditors and the main contribution of our article is to address this gap. This research builds on adjacent audit oversight and capital markets literature and we extend this literature by providing evidence on third-country auditors. Specifically, we test the relationship between market capitalization and number of foreign IPOs of listed companies in representative EU countries (on one hand) and the existence of third-country auditors in those respective countries (on the other hand). Our research was performed in the second half of 2018 and is based on the latest data available. We have found that there are about 200 third-country auditors present in the public registers of audit oversight bodies in 11 EU countries. According to our network analysis, only European countries with a developed capital market have attracted third-country auditors. Most of the relationships of these developed EU capital markets are nurtured with non-EU capital markets that are at the same level of development (e.g. USA, Switzerland, Canada, Israel, and Australia). Our research hypotheses were validated: (1) the higher the market capitalization of a EU country, the higher the likelihood for the registration of third-country auditors; (2) the higher the number of foreign IPOs relative to the total IPOs on the stock exchange market, the higher the likelihood for the registration of third-country auditors.</p></abstract>

We identified a notable lack of academic literature on the issue of third-country auditors and the main contribution of our article is to address this gap. This research builds on adjacent audit oversight and capital markets literature and we extend this literature by providing evidence on third-country auditors. Specifically, we test the relationship between market capitalization and number of foreign IPOs of listed companies in representative EU countries (on one hand) and the existence of third-country auditors in those respective countries (on the other hand). Our research was performed in the second half of 2018 and is based on the latest data available. We have found that there are about 200 third-country auditors present in the public registers of audit oversight bodies in 11 EU countries. According to our network analysis, only European countries with a developed capital market have attracted third-country auditors. Most of the relationships of these developed EU capital markets are nurtured with non-EU capital markets that are at the same level of development (e.g. USA, Switzerland, Canada, Israel, and Australia). Our research hypotheses were validated: (1) the higher the market capitalization of a EU country, the higher the likelihood for the registration of third-country auditors; (2) the higher the number of foreign IPOs relative to the total IPOs on the stock exchange market, the higher the likelihood for the registration of third-country auditors.

Interrelation of Capital Markets in the Context of Increased Audit Oversight in the European Union – Evidence on Third-Country Auditors

The Bucharest University of Economic Studies

Zagreb International Review of Economics and Business

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

We identified a notable lack of academic literature on the issue of third-country auditors and the main contribution of our article is to address this gap....

Interrelation of Capital Markets in the Context of Increased Audit Oversight in the European Union – Evidence on Third-Country Auditors

Published Online: Jun 08, 2020

Page range: 71 - 80

DOI: https://doi.org/10.2478/zireb-2020-0005

Keywords
capital markets, audit oversight, third-country auditors, European Union

© 2020 Mihaela Mocanu et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Interrelation of Capital Markets in the Context of Increased Audit Oversight in the European Union – Evidence on Third-Country Auditors

Published Online: Jun 08, 2020

Page range: 71 - 80

DOI: https://doi.org/10.2478/zireb-2020-0005

Keywordscapital markets, audit oversight, third-country auditors, European Union

© 2020 Mihaela Mocanu et al., published by Sciendo

This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 License.

Keywords
capital markets, audit oversight, third-country auditors, European Union