Corporate Governance, Auditor Selection and Firm Value of the Companies Listed on the Stock Exchange of Thailand with Excellent Corporate Governance Assessment Results

Abstract

The purposes of this study were to investigate the relationship between corporate governance and
auditor selection of Big 4 audit firms, explore the effects of corporate governance with firm value, and
compare the differences of firm value according to its different auditor selection: different size of audit firms
of companies listed on the Stock Exchange of Thailand with excellent corporate governance assessment.
Secondary data were used and collected from annual registration statements (Form 56-1) and financial
statements of companies listed on the Stock Exchange of Thailand. The samples in this study were 107
companies out of the total of 535 companies, excluding financial industry, from 2014 to 2018. Descriptive
statistics, logistic regression analysis, stepwise multiple regression analysis and t-test were used to analyze
the data and test the hypothesis. The variables of corporate governance were composed of the CEO and
the board chairman’s independence, non-board member administrative team, board independence, board
size, non-shareholder board, CEO experience, and number of audit committee. The auditor representatives
in this research were selected according to the audit firm size and firm value measured by Tobin's Q.
The logistic regression analysis showed that board independence had a negative relationship with
auditor selection of Big 4 audit firms. In addition, the stepwise multiple regression analysis revealed that
board independence negatively affected firm value. The CEO and the board chairman’s independence, non-board member administrative team, boards size, non-shareholder board, CEO experience and number of
audit committee showed no relationship with auditor selection and firm value. In addition, there were no
differences of firm value in auditor selection from different sizes of audit firms at the statistically significant
level at 0.05. The findings of this study can be attributed both theoretically and practically in corporate
governance and in improving good practice that the appropriate number and qualification of the independent
board should be considered to increase the quality of financial reporting and firm value.