Effects of corporate governance on audit quality

Abstract

It has been highlighted by the business world that audit quality and corporate governance can play critical roles in various corporate scandals. Understanding how the relationships between effective corporate governance and audit quality is important, requires investigating their components more precisely. So, the present study aims to carry out a comprehensive review and comparative summarizing the results of the published works on the effectiveness of corporate governance mechanisms, as well as audit committee’s influencing factors, in order to investigate their probable effects on audit quality. In this regard, despite audit quality influencing factors and auditor specifications were found to be able to affect the audit quality significantly, audit firm size has been identified as the most important factor affecting audit quality. Moreover, both board of directors and audit committees specifications were identified as critical influencing factors in the effectiveness of corporate governance which interacts with audit quality. As a consequence, changes in effectiveness of the corporate governance should be considered as an important factor, when assessing the audit quality.