Arcticle’s by Slobodan Kacanski

In our recent article published in the European Accounting Review, Dean Lusher, Peng Wang and I studied auditor selection process. We assummed that client’s selection of the engagement partner is driven both by engagement partner’s reputation, and also recommendations that board of directors receive through interlocking board members. Our study was inspired by the finding that major body of audit partner selection literature implicitly assumed that the demand side mechanism that assists buyers in differentiating experience goods is either driven by reputation or recommendation. This has resulted with the polarization of the arguments around one of the two mechanisms in…