Auditor Choice and Institutional Investor Choice after the Enron Scandal.

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The institutional investor, who has owned significant amount of investment concern with monitoring duties of management, as they gain benefit from it. They require high quality of information and have a power to carry out financial analysis. Their monitoring role become important since there is increase in agency conflict between managers and shareholders. The institutional investor tend to pressure manager in order to protect shareholder interest. Since the institutional investor need to control their investment and assess portfolio choice, they need reliable accounting information. The reliable accounting information came from annual report, as annual report provide assurance on firm health and performance. Therefore, annual report give impact to market reaction, so do the auditors brand name and their reputation. Big 4 audit firm who have good reputation, considered as good in delivering audit quality. Big 4 audit firm consists of Deloitte, PricewaterhouseCoopers, Earnst & Young (EY) and KPMG. Based on research, Big 4 audit firm may help their client to reduce agency conflict and lead to lower agency cost. Besides, Big 4 audit firm give the firm confidence to detect fraudulent financial statements and help to reduce information asymmetry (Azibi, Tounder, & Rajhi, 2010). Research show that the institutional investor from French company tend to favour Big 4 audit firm, as the shareholder suffer lack of legal protection. Undeveloped financial security system make the role

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