Auditee and audit firm characteristics as determinants of audit qualifications

Emerald - 2006
ConstantinosCaramanis1, CharalambosSpathis2
1Department of Business Administration, Athens University of Economic and Business, Athens, Greece
2Division of Business Administration, Department of Economics, Aristotle University of Thessaloniki, Thessaloniki, Greece

Tóm tắt

PurposeThe objective of this paper is to test the extent to which combinations of financial information with non‐financial variables, such as audit fees and type of audit firm, can be used in predicting qualified and unqualified audit reports.Design/methodology/approachThe data were taken from a sample of 185 Greek companies listed at the Athens stock exchange and were analysed using logistic and OLS regression models.FindingsIt is found that audit fees and the type of audit firm (Big five vs non‐Big five) do not affect auditors' propensity to qualify their opinions. Instead, the occurrence of audit qualifications is associated with financial metrics such as operating margin to total assets and the current ratio. The model developed was successful in classifying 90 per cent of the total sample.Originality/valueThis study has implications for external auditors, regulators and investors. Also contributes to auditing and accounting research by examining the suggested variables to identify those that can best discriminate cases of audit opinion.

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