SMART JOURNAL OF BUSINESS MANAGEMENT STUDIES VOL. 19 NO. 1 PAPER 7
10.5958/2321-2012.2023.00007.6
AUDIT QUALITY ATTRIBUTES AND FIRM PROFITABILITY: EMPIRICAL EVIDENCE
 
Khaled Salmen Aljaaidi*"
*    Accounting Department, College of Business Administration, Prince Sattam bin Abdulaziz University
 
This study aims at examining the impact of audit quality mechanisms, like auditor brand name and audit report delay, on firm profitability. The final sample of this study consisted of 495 firm-year observations of companies, listed on Saudi Stock Exchange (Tadawul), for the period ranging from 2012 to 2019. The Ordinary-Least Square (OLS) regressionsí results revealed a positive and significant association between auditor brand-name and firm profitability. Further, as companies hire a high quality auditor, their performance is increased. The study also found that audit report delay negatively impacted firm profitability. In other words, the delay in issuance of audit report signaled reduced firm profitability. In a wider context, the results of this study have implications to corporate governance mechanisms because such mechanisms may impact the degree of firm profitability. Moreover, the findings have meaningful implications for the Capital Market Authority (CMA) and Saudi listed companiesí managements because they could be prompted to hire higher quality auditors and reduce the delay in the issuance of the audit report.
 
KEYWORDS: Audit Quality Mechanisms, Profitability and Saudi Arabia JEL CLASSIFICATIONS: L25, P27 and M42 FULL TEXT