The Effect of Audit Firm Reputation on the Financial Reporting Quality, and the Role of Auditor Industry Specialization as a Moderator: An Empirical Study in Egyptian Stock Exchange

The purpose of this paper is to study and investigate whether audit firm reputation provides insight into financial reporting quality of listed companies in Egypt. And the role of auditor industry specialization as a moderator financial reporting quality measured by the level of accounting conservatism is compared between firms audited by Big4 auditors as an indicator of audit firm reputation and non Big4 auditors. Using the sample of 60 listed companies in Egypt during 2018–2022, the study finds that audit firm reputation does not have a significant effect on the financial reporting quality. On the other hand, auditor industry specialization has improved the link between audit firm reputation measured by Big4 auditors and the financial reporting quality. the results show a positive and significant effect of audit firm reputation on financial reporting quality in the presence of auditor industry specialization.  At the same time, the leverage has a negative and significant effect on the financial reporting quality.  While company size, profitability (RoA), and liquidity do not have significant effect on financial reporting quality. This study could provide valuable information for investors and shareholders when using financial report as well as the regulatory bodies in enhancing financial reporting quality and promoting high level of accounting and auditing compliance.