Auditee and audit firm characteristics as determinants of audit qualifications: Evidence from the Athens stock exchange
Abstract
Purpose
The objective of this paper is to test the extent to which combinations of financial information with non‐financial variables, such as audit fees and type of audit firm, can be used in predicting qualified and unqualified audit reports.
Design/methodology/approach
The data were taken from a sample of 185 Greek companies listed at the Athens stock exchange and were analysed using logistic and OLS regression models.
Findings
It is found that audit fees and the type of audit firm (Big five vs non‐Big five) do not affect auditors' propensity to qualify their opinions. Instead, the occurrence of audit qualifications is associated with financial metrics such as operating margin to total assets and the current ratio. The model developed was successful in classifying 90 per cent of the total sample.
Originality/value
This study has implications for external auditors, regulators and investors. Also contributes to auditing and accounting research by examining the suggested variables to identify those that can best discriminate cases of audit opinion.
Keywords
Citation
Caramanis, C. and Spathis, C. (2006), "Auditee and audit firm characteristics as determinants of audit qualifications: Evidence from the Athens stock exchange", Managerial Auditing Journal, Vol. 21 No. 9, pp. 905-920. https://doi.org/10.1108/02686900610705000
Publisher
:Emerald Group Publishing Limited
Copyright © 2006, Emerald Group Publishing Limited