Recruitment Determinants For Central and Non-Local Auditors: an Analytical on the Tehran Stock Exchange

Authors

DOI:

https://doi.org/10.26668/businessreview/2023.v8i5.1291

Keywords:

Local Auditors, Customer Report Risks, Audit Fees

Abstract

Purpose:  The object of this analysis is to investigate empirically the determinants of the audit selection by local or Non-local Auditor (NLA) and their effect on companies listed on the Tehran Bourses.

 

Theoretical framework: The selection of an independent auditor is influenced by numerous factors. The agency theory predicts that when firm size, debt leverage, and staff compensation costs rise, the likelihood of electing a qualified volunteer auditor in the ordinary general assembly will as well (Hassas Yeganeh & Heidari, 2008).

 

Design/methodology/approach:  The study seeks to examine whether local or NLA are chosen in companies mentioned on the Tehran Stock Exchange (TSE). The research sample contains 108 companies listed on the Tehran Bourses between 2013 and 2019.

 

Findings:  The findings show that the probability of contracting with a NLA decline to a considerable degree if there is a rise in the number of local auditor (LA) regardless of auditor rating. Also, the likelihood of choosing a NLA is lower for high-quality financial reporting companies. Besides, if a NLA is selected, audit fees (AF) are likely to be reduced.

 

Research, Practical & Social implications: Independence is a determinant of employment for central and non-local auditors. The studies focus on auditor independence, which non-local auditors may not have when compared to local auditors in companies in which the government contributes to financing part of its capital.

 

Originality/value:  The research adds to the literature on corporate governance by emphasizing that Board oversight is not a good alternative to auditor monitoring of Financial Statements (FS) credibility and indicates that an auditor may have licensing criteria.

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Published

2023-05-05

How to Cite

Union, A. H., Al-Shiblawi, G. A. K., & Abdulzahra, A. N. (2023). Recruitment Determinants For Central and Non-Local Auditors: an Analytical on the Tehran Stock Exchange. International Journal of Professional Business Review, 8(5), e01291. https://doi.org/10.26668/businessreview/2023.v8i5.1291