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| Soumaya Ayedi, Azhaar Lajmi and Emna Boumediene |
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| ''The effects of agency conflicts on audit quality demand: Evidence from Tunisia'' |
| ( 2019, Vol. 39 No.3 ) |
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| This study investigates whether agency conflicts affected the demand of audit quality by Tunisian listed firms. Our theoretical framework suggests that firms with high agency conflicts were more likely to demand audit quality. Focusing on owners, shareholders and lenders agency conflicts, we conduct an empirical study based on data from 253 firm-year observations. Our findings are consistent with the predictions of agency theory. We show that an increase in managerial ownership decreases the likelihood that the firm will engage a Big 4 auditor. An increase in ownership concentration and leverage in high investment opportunities set, on the other hand, increases the likelihood of a firm demanding higher audit quality. We document that size of audited client is also a significant determinant of audit quality demand. |
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| Keywords: audit quality, agency theory, ownership structure, leverage, investment opportunities |
JEL: M4 - Accounting and Auditing: General
G3 - Corporate Finance and Governance: General |
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| Manuscript Received : Feb 21 2019 | | Manuscript Accepted : Sep 30 2019 |
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