Long-tenured directors have greater knowledge and experience, resulting in higher monitoring effectiveness. However, they may be less effective because they are more likely to deepen their friendships with managers. This study aims to examine whether the long-tenured board is more likely to select an industry-specialist auditor at the audit-firm or -partner level. Using 1992-2011 Taiwanese publicly traded companies as the sample, and using a dummy variable (board tenure greater than 9 years) and continuous variables to measure a long-tenured board, the results show that companies with a long-tenured board are more likely to select an industry-specialist auditor at both the audit firm and audit partner levels. Our supplemental results show that board tenure is significantly negatively associated with the internal corporate governance variables. Additionally, the likelihood of financial misstatements by clients with a long-tenured board of an industry specialist auditor at both the audit firm and partner levels is significantly lower. We also use discretionary accruals to measure financial reporting quality, and the results still support our main findings. Overall, while companies with a long-tenured board have weak internal corporate governance, they select industry-specialist auditors as a remedy to enhance financial reporting quality.
long-tenured board of directors, auditor selection, financial reporting quality