Firm Performance: An Analysis of Financial Policy and Audit Quality in Pakistan

Muhammad Rizwan Kamran, Mugeeb Zaman Shami, Aiza Khan and Muqdas Muhammad Hussain

Journal of Accounting and Finance in Emerging Economies, 2023, vol. 9, issue 4, 479-488

Abstract: Purpose: Having effective and well-structured financial policies is essential for a company's success. These policies provide the foundation for measuring and analyzing an organization's performance through a robust financial management system. This study introduces a novel element, namely, audit quality, to enhance our understanding of how financial policies impact a firm's performance. The primary objective of this research is to delve deeper into whether audit quality plays a moderating role in the relationship between financial policies and a firm's performance.Design/Methodology/Approach: Discretionary accruals were calculated using a regression model, and descriptive analysis was employed to analyze the data.Findings: The results of the study reveal that the connection between free cash flow, agency costs, and a firm's performance is significantly influenced by audit quality. &This research particularly offers valuable insights into the manufacturing sector, where performance is of paramount importance.Implications: By considering the interplay of financial policy, audit quality, and firm performance, businesses and policymakers can make more informed decisions that contribute to the overall prosperity of the Pakistani corporate sector.

Keywords: Agency Cost; Free Cash Flow; Audit Quality; Firm Performance (search for similar items in EconPapers)
Date: 2023
References: Add references at CitEc
Citations:

Downloads: (external link)
https://publishing.globalcsrc.org/ojs/index.php/jafee/article/view/2792/1645 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:src:jafeec:v:9:y:2023:i:4:p:479-488

DOI: 10.26710/jafee.v9i4.2792

Access Statistics for this article

More articles in Journal of Accounting and Finance in Emerging Economies from CSRC Publishing, Center for Sustainability Research and Consultancy Pakistan Contact information at EDIRC.
Bibliographic data for series maintained by Rabia Rasheed ().