The Survey of the Relationship between Auditing Quality and the Profitability in the Companies Accepted in Tehran’s Exchange Market

Gholamreza Rahimi () and Samira Mohammad Amini

International Journal of Academic Research in Accounting, Finance and Management Sciences, 2015, vol. 5, issue 2, 100-115

Abstract: The present study deals with the evaluation of the relationship between auditing quality and the profitability in the companies accepted in Tehran’s securities exchange market. To determine the auditing quality there has been made use of two scales of auditor size (DeAngelo, L.E., 1981) and the auditor’s tenure period (Myers, J.N., Myers, L.A. & Omer, T.C., 2003). The total number of 52 companies accepted in Tehran’s securities exchange market has been surveyed. The study findings show that generally there is a positive and weak relationship between the auditor size (auditor’s good fame) and the auditor’s tenure period and the profitability ratios. To survey the auditor’s size the member auditing institutions of the formal accountant society are regarded as small auditing firms and accounting organization due to the great many staff members working in it and also due to their long working history is considered as the big auditing institution. Also, there is a positive but non-significant relationship between profitability and auditors size and there is a positive and significant relationship between tenure period and profitability. This is indicative of the fact that in the employer firms in which an auditor performs the job of auditing for several years, the amount of profitability and also its sustainability is higher on the condition that the auditor’s tenure period is due to the auditing organization.Classification-JEL:

Keywords: Auditing quality; auditor’s tenure period; auditor’s size; profitability ratios and Tehran’s securities exchange market (search for similar items in EconPapers)
Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:hur:ijaraf:v:5:y:2015:i:2:p:100-115

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