THE EFFECT OF AUDIT CHARACTERISTICS ON FINANCIAL REPORTING QUALITY AND THE MEDIATING ROLE OF AUDIT QUALITY: EVIDENCE FROM MALAYSIAN PUBLIC COMPANIES

Authors

  • YUVARAJ GANESAN Graduate School of Business, Universiti Sains Malaysia, 11800 Penang, Malaysia
  • MUHAMMAD SHABIR SHAHARUDIN School of Management, Universiti Sains Malaysia, 11800 Penang, Malaysia
  • ABDULLAH MOHAMMED SADAA Department of Business Administration, Al-Maarif University College, 31001, Al-Anbar, Iraq
  • RANJANI NARAYANAN Graduate School of Business, Universiti Sains Malaysia, 11800 Penang, Malaysia
  • RAHUL SHARMA School of Business, Skyline University College, Sharjah, UAE
  • HASNAH HARON Faculty of Economics and Muamalat, Universiti Sains Islam Malaysia, 71800, Negeri Sembilan, Malaysia.

DOI:

https://doi.org/10.33736/ijbs.6920.2024

Keywords:

Audit characteristics, Financial reporting quality, Audit quality, Malaysian companies

Abstract

Our paper examines the effect of audit characteristics on financial reporting quality (FRQ) and the role of audit quality (AQ) as a mediator. The study adopted 201 companies listed in Malaysian Bursa from 2017 to 2019 to achieve our objective. The study used Stata to analyze the data to estimate the effect proposed in the hypotheses. Findings show that only audit fees affected FRQ positively. At the same time, audit fees and company size have positively influenced AQ. On the other hand, AQ has improved the link between audit characteristics and FRQ since the results show a positive effect of audit tenure, audit fees, and audit company size on FRQ through the mediator. This research can help the Institute of Internal Auditors and the Association of Certified Fraud Examiners improve their rules and regulations by enhancing audit characteristics, technical competence, and functionality to help organizations improve AQ. The study's findings are relevant to governments and investors worldwide worried about FRQ and want to guarantee that operations in Malaysia and other emerging markets are closely monitored.

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Published

2024-04-04

How to Cite

YUVARAJ GANESAN, MUHAMMAD SHABIR SHAHARUDIN, ABDULLAH MOHAMMED SADAA, RANJANI NARAYANAN, RAHUL SHARMA, & HASNAH HARON. (2024). THE EFFECT OF AUDIT CHARACTERISTICS ON FINANCIAL REPORTING QUALITY AND THE MEDIATING ROLE OF AUDIT QUALITY: EVIDENCE FROM MALAYSIAN PUBLIC COMPANIES. International Journal of Business and Society, 25(1). https://doi.org/10.33736/ijbs.6920.2024