The Impact of Operational Characteristics of the Companies on The Perceived Quality of the External Audit : An Empirical Study on a Sample of Non-Financial Companies Listed in the Egyptian Stock Exchange In the Period From 2016 to 2017.

Document Type : Original Article

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Accounting Department Faculty of Commerce Damnhour University Damnhour Egypt

Abstract

The primary objective of this research is to investigate the relation between the operational characteristics of the companies (company size  company leverage  Institutional ownership) and perceived quality of the external audit (measured by auditor's industrial specialization). Additionally, the research examines how this relation is influenced by company's profitability and accounting conservatism as moderating variables. to achieve the aim of the research an empirical study was conducted on a sample of firms listed in the Egyptian stock exchange between 2016 and 2017. The theoretical study shows that the operational characteristics of the companies (company size  leverage – Institutional ownership) have a positive effect on perceived quality of audit. Moreover, the empirical study shows that the operational characteristics of the companies (company size –leverage  Institutional ownership) have a significant positive effect on the perceived quality of audit (whether by auditor's industrial specialization, or auditor size) of the Egyptian firms. The research also reveals an insignificant effect of the company's profitability as a moderating variable on this relation. Finally the accounting conservatism has an insignificant effect on the relationship between the operational characteristics of the companies (Except Institutional ownership) and the perceived quality of audit.

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