The relationship between the operational characteristics of companies and the quality of external audit - an applied study on family and non-family companies listed in the stock exchange

Document Type : Original Article

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Accounting Department Faculty of Commerce Bani Swaiv University Bani Swaiv Egypt

Abstract

The research aimed at studying the relationship between the operating characteristics of family and non-family firms, which are registered in the stock market and the quality of external audit through conducting a theoretical and applicable study. Based on the theoretical study, the researcher reviewed the concept of the quality of external audit and its determinants. The researcher concluded that there is no a specific concept for the quality of external audit and its determinants .However, The quality of external audit should reflect the ability of the auditor to discover any material misstatements in financial statements whether due to error or fraud. The researcher also reviewed the essence of family and non-family firms and their operating characteristics. Moreover, the researcher concluded that the concept of family firms has two approaches, one of them relates to the firm ownership and the other one focuses on the firm management.Based on the applicable study, The researcher tested research hypotheses. After testing the first hypothesis, the researcher concluded that the operating characteristics of family firms have no significant impact on audit quality except for firm size, based on wald test, The natural logarithm of total assets has a significant impact on audit quality. Furthermore, After testing the second hypothesis, the researcher concluded that the operating characteristics of non-family firms have no significant impact on audit quality. while testing the third hypothesis found that there are no significant differences between family and non-family firms regarding the relationship under study.

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