A Comprehensive Model of Factors Influencing Audit Failure: A Logistic Regression Approach

Authors

    Saeed Zarrin PhD Student of Accounting, Tabriz Branch, Islamic Azad University, Tabriz, Iran
    Ahmad Mohammadi * Assistant Professor, Department of Accounting, Tabriz Branch, Islamic Azad University, Tabriz, Iran iacpa_a_mohammadi@yahoo.com
    Mehdi Zeynali Assistant Professor, Department of Accounting, Tabriz Branch, Islamic Azad University, Tabriz, Iran
https://doi.org/10.61838/kman.jtesm.3.5.14

Keywords:

Audit failure, audit error, audit comment

Abstract

The present study aims to explain the influencing factors—including auditor characteristics, client characteristics, stock market features, and macroeconomic factors—on failure in companies listed on the Tehran Stock Exchange. To achieve this objective, 1,848 firm-year observations (154 companies over 12 years) were collected from the annual financial reports of companies listed on the Tehran Stock Exchange during the period from 2011 to 2022. The study findings indicate that auditor size, auditor tenure, auditor independence, audit firm ranking, type of auditor's opinion, audit report delay, auditor specialization, audit fees, company size, company liquidity, company profitability, institutional ownership, major shareholder ownership, board independence, CEO tenure, inflation rate, exchange rate, and economic growth rate have a negative and significant impact on audit failure. Conversely, auditor change, company's debt ratio, government ownership, unsystematic risk, and interest rate have a positive and significant effect on audit failure. Finally, the results show that, statistically, company age, company growth opportunities, client industry size, client industry competition level, client ownership type (private or public), managerial ownership, audit committee size, audit committee independence, audit committee financial expertise, board size, board financial expertise, and systematic risk do not have a significant effect on audit failure.

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Published

2024-12-31

Submitted

2025-01-20

Revised

2025-02-13

Accepted

2025-03-01

Issue

Section

پژوهشی اصیل

How to Cite

Zarrin, S., Mohammadi, A., & Zeynali, M. . (2024). A Comprehensive Model of Factors Influencing Audit Failure: A Logistic Regression Approach. Journal of Technology in Entrepreneurship and Strategic Management (JTESM), 3(5), 253-272. https://doi.org/10.61838/kman.jtesm.3.5.14

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