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In-network auditors and subsidiaries’ investment efficiency

Eva Labro et al.

The European Accounting Review2026https://doi.org/10.1080/09638180.2026.2624458article
AJG 3ABDC A*
Weight
0.50

Abstract

This paper examines the impact of appointing in-network auditors (i.e., audit firms from the same global audit firm network) in business groups on the investment efficiency of subsidiaries. We use a sample of European business groups for which we observe the parent and both domestic and foreign subsidiaries. Our findings reveal that an audit by in-network auditors does not affect the investment efficiency of domestic subsidiaries but leads to improvements in the investment efficiency of foreign subsidiaries. Specifically, external audits by in-network auditors are associated with a reduced likelihood and reduced extent of over-investments by foreign subsidiaries. While prior research mostly focuses on the role of auditors in providing financial reporting assurance within business groups, our study shows that in-network auditors provide audits with more added value by enhancing subsidiary investment efficiency.

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https://doi.org/https://doi.org/10.1080/09638180.2026.2624458

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@article{eva2026,
  title        = {{In-network auditors and subsidiaries’ investment efficiency}},
  author       = {Eva Labro et al.},
  journal      = {The European Accounting Review},
  year         = {2026},
  doi          = {https://doi.org/https://doi.org/10.1080/09638180.2026.2624458},
}

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In-network auditors and subsidiaries’ investment efficiency

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Evidence weight

0.50

Balanced mode · F 0.40 / M 0.15 / V 0.05 / R 0.40

F · citation impact0.50 × 0.4 = 0.20
M · momentum0.50 × 0.15 = 0.07
V · venue signal0.50 × 0.05 = 0.03
R · text relevance †0.50 × 0.4 = 0.20

† Text relevance is estimated at 0.50 on the detail page — for your query’s actual relevance score, open this paper from a search result.