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The impacts of interaction of audit litigation and ownership structure on audit quality

Author

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  • Riyadh Jassim AL Abdullah

    (Bayan University)

  • Mawih Kareem AL Ani

    (Dhofar University)

Abstract

This study examines the impact of the interactions of audit litigation and ownership structure on audit quality by Big 4 and non-Big 4 audit firms in Oman. This study uses modified audit opinion as proxies for audit quality, binary variable for audit litigation and percentage of shares owned by large shareholders and minority shareholders (consisting of Arab [non-GCC] shareholders) for ownership structure. The study uses size, risk, types of activity and ages of the firms as control variables. For the analysis and explanation of results descriptive statistics, correlation, regression techniques and T-test are used. Based on a sample of 107 listed companies on Muscat Securities Market (MSM) for 2013–2017, we find that audit litigation has a significant impact on audit quality for Big 4 audit firms, but not for non-Big 4 audit firms. Also, the results indicate that there is no difference between Big 4 and non-Big 4 audit firms as far as litigation risk is concerned.

Suggested Citation

  • Riyadh Jassim AL Abdullah & Mawih Kareem AL Ani, 2021. "The impacts of interaction of audit litigation and ownership structure on audit quality," Future Business Journal, Springer, vol. 7(1), pages 1-14, December.
    • Handle: RePEc:spr:futbus:v:7:y:2021:i:1:d:10.1186_s43093-021-00067-8
    DOI: 10.1186/s43093-021-00067-8
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    References listed on IDEAS

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    More about this item

    Keywords

    Audit litigation; Audit quality; Ownership structure; Emerging economy; Oman;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M42 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Auditing
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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