Auditor Signing Networks and Corporate Investment Efficiency: Evidence From Taiwan’s Dual-Attestation System

Abstract

This study investigates whether common auditor signing networks serve as effective information channels that enhance corporate investment efficiency. Taking advantage of Taiwan’s unique dual-attestation audit system, which requires listed firms to engage two signing auditors, we construct inter-firm auditor networks based on overlapping audit relationships. Using a sample of firms audited by Big Four audit firms from 2013 to 2022, we examine whether participation in these auditor signing networks is associated with improved investment outcomes. Empirical results indicate that greater embeddedness in auditor signing networks is associated with significantly lower investment inefficiency. Further analyses reveal that auditor signing networks effectively mitigate both overinvestment and underinvestment, suggesting that information spillovers within these networks enhance corporate capital allocation. This effect operates through the alleviation of agency conflicts and financial constraints. By uncovering a governance mechanism embedded in Taiwan’s dual-attestation system, this study underscores the role of auditors as conduits for inter-firm information transmission, with meaningful implications for firms’ real economic decisions.