Methodology
In this paper, the data consists of firms traded
in Stock Exchange of Thailand between 2001 and
2005. Three sources of data are used. The first
source of data in financial statement is based on
database called çData-streamé in which financial
figures are grouped in such a way that user can use
for cross-sectional comparison.
The second source is business on line web site
(www.bol.co.th) which provides the list of auditors
who express the opinion whether financial
statements are correct and fair represent the
financial status of the companies.
The third source is Securities Exchange
Commission web site (www.sec.or.th) which
provides us the auditors who are granted to sign in
financial statement of listed companies. In this
source, there also provides us the audit firm where
granted auditors are members. Due to the financial
fraud of Enron and the merger between 2 big 6,
there are now only big 4 auditors that survive
beyond 2005 (PricewaterhouseCoopers, Ernst &
Young, Deloitte Touche Tohmatsu, and KPMG).
The final sample size is 840 company year firm
observations between 2001 and 2005 (168
companies).
According to the literature review, the firms with
exceed free cash flow and low growth opportunities
have incentives to use those money in non
maximizing shareholder wealth projects or use
expenditures which do not benefit to owners.
However, by the use of external monitoring,
managers are obstructed to manage earnings.