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Investigating the Dynamic Role of Litigation Risk Moderation in the Relationship Between Audit Quality and Audit Size: Bayesian vector Auto regression approach
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Majid Montasheri   , Daryush Farid * |
| Yazd university |
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Abstract: (1309 Views) |
| The audit profession has witnessed an increase in complaints against auditors over the past few years and the extent of the damage caused by these complaints. The unpleasant consequences of these complaints cost the audit community a lot, and hit the core of this profession. The purpose of the present study was to investigate the dynamic relationship between audit quality, audit size and litigation risk in companies listed in Tehran Stock Exchange. The unique feature of this study was first to examine the dynamic relationship between litigation risk, audit size and audit quality, which provides companies with guidelines for choosing an auditor type as well as reducing existing risks and secondly, using the Bayesian vector Auto regression technique that performs a more accurate prediction of the patterns of simultaneous equations. The sample of the study was selected using systematic elimination method and with the restrictions imposed, 84 companies were selected from 2008 – 2017. The hypotheses were analyzed using Bayesian Vector Auto regression statistical approach. The results indicate a significant and long-term relationship between audit size and litigation risk with audit quality. Also, the litigation risk moderates the relationship between audit size and audit quality and will improve the quality of companies auditing. |
Article number: 5 |
| Keywords: Litigation Risk, Audit Quality, Audit Size, Bayesian Vector Auto Regression Approach |
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Full-Text [PDF 1211 kb]
(464 Downloads)
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Type of Study: Research |
Subject:
Auditing
Received: 2019/08/8 | Accepted: 2020/08/16 | Published: 2022/01/2
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