The geographical factor in the determination of audit quality

Antonio luis Duréndez Gómez-Guillamón and Mariluz Maté Sanchez-Val

Revista de Contabilidad - Spanish Accounting Review, 2012, vol. 15, issue 2, 287-310

Abstract: The aim of this research paper is to analyze the role of the spatial factor in the determination of audit quality. Concretely, we hypothesize that audit quality is influenced by location and by the existence of spill-over effects generated by two factors: (1) the specialization and reputation of auditing firms and (2) the economic and institutional development of the audit firm's location. We developed an empirical research to test the existence of such spatial effects (location and spill-over) on a representative sample of the Spanish audit market. The study includes spatial econometric techniques taking into account the auditee specific characteristics, as well as other external factors. The findings highlight the relevance of including the spatial dimension when the audit quality is being studied. The results confirm the existence of a location effect according to the highest quality values are found in the most developed Spanish areas. Furthermore, we find a spatial spill-over effect among regions, affecting audit quality values. This effect confirms that audit quality within a location spreads to its surroundings. The results support the promotion of governmental policies leading to improve audit quality considering the spill-over effect.

Keywords: audit quality; spatial effects; audit market; regional analysis; calidad de la auditoría; mercado de auditoría; efectos espaciales; análisis regional (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:spacre:v:15:y:2012:i:2:p:287-310

DOI: 10.1016/S1138-4891(12)70046-8

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