Auditor-management alignment and audit opinion: Evidence from Iran

Abstract

This study investigates the effect of auditor-management alignment on audit opinion over the period 2003- 2011 on 81 firms listed on the Tehran Stock Exchange using logistic regression analysis. Results indicate that in companies with auditor-management alignment, auditor change level is low. In addition, the results indicate there is no relationship between auditor-management alignment, debt ratio, ownership percentage, firm size and auditor change with unqualified audit opinion. However, research evidences show that auditor's opinion type at previous year, audit fees, auditor type and return on assets ratio influence unqualified audit opinion. Among above variables, auditor's opinion types at previous year, audit fees and return on assets ratio have direct relationship with unqualified audit opinion but auditor type has a negative and inverse relationship with unqualified audit opinion.

Keywords

• Auditor-management alignment
• Audit quality
• Competition in audit market and audit fees