The effectiveness of audit firm rotation on audit quality in companies listed on the Tehran Stock Exchange using Pearson's linear torque model

Hassanpour, Shiva

doi:10.22075/ijnaa.2023.24957.4311

The effectiveness of audit firm rotation on audit quality in companies listed on the Tehran Stock Exchange using Pearson's linear torque model

Document Type : Research Paper

Author

Shiva Hassanpour

Department of accounting, Ahvaz Branch, Islamic Azad University, Ahvaz, Iran

10.22075/ijnaa.2023.24957.4311

Abstract

The purpose of this research is to investigate the effectiveness of audit firm rotation on audit quality in companies listed on the Tehran Stock Exchange using Pearson's linear torque model. In order to achieve the purpose of the study, using the method of screening or systematic removal of the number of 90 companies admitted to the Tehran Stock Exchange, during the period of 2016 to 2021, selection and panel or combined data related to 630 companies-years from the database of the organization The stock market and securities were collected. This research is categorized as descriptive-correlation research in terms of its practical purpose, and historical or post-event-field research in terms of time. The results of the statistical analysis show that there is a direct relationship between the mandatory rotation of auditors and audit quality. In addition, the study shows that the companies that have changed their external auditors during the research period have a higher average "audit quality" and a lower dispersion coefficient of "audit quality" compared to the competing group or companies subject to the retention of independent auditors. They were. The conducted research showed that the coefficient of variance of the "audit quality" factor was higher for the business owners whose independent auditors were subject to mandatory rotation compared to their competitor group or the business owners whose independent auditors were not subject to mandatory rotation.

Keywords

Audit firm rotation

Audit quality

Independent auditor

Financial leverage

Pearson's linear torque model

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