An explanation of causes of business failure based on audit report disclosure, audit variables, and corporate governance mechanisms from the perspective of senior managers in companies listed on the Tehran Stock Exchange

Document Type : Research Paper


Department of Accounting, Sirjan Branch, Islamic Azad University, Sirjan, Iran.


The present research aimed to investigate the explanatory roles of audit report disclosure, audit variables, and corporate governance mechanisms in explaining the causes of business failure in companies listed on the Tehran Stock Exchange from the perspective of company managers. To this end, 249 senior managers from companies listed on the stock exchange were selected using convenience and purposive sampling methods, and a researcher-made questionnaire was emailed to them. The present research had a survey-causal type. The data collection tool included a researcher-made questionnaire that evaluated the roles of three main research variables in explaining the causes of business failure. The validity and reliability of the research tools were confirmed. Analysis of data was performed in SPSS and LISREL (through confirmatory factor analysis). The audit report disclosure about negative working capital (among the audit report disclosure variables) with a coefficient of 6.68, auditor tenure (among the audit variables) with a mean coefficient of 6.05, ownership concentration (corporate governance mechanisms) with a mean of 3.86 had the highest importance and impact in explaining the causes of business failure. In general, audit variables with a coefficient of 2.29 had the highest importance and impact in explaining the causes of business failure. The results of structural equations indicated that the business failure model was valid based on three main research variables. Furthermore, all three variables played significant roles in explaining the causes of business failure.


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Volume 14, Issue 4
April 2023
Pages 87-100
  • Receive Date: 10 November 2021
  • Revise Date: 24 January 2022
  • Accept Date: 02 February 2022
  • First Publish Date: 14 September 2022