Examining the Relationship Between Audit Quality and Risk Taking in Value Creation: The Role of Company Size as a Mediator

Subject Areas : • Emerging technology in the field of Accounting and its future

Hossein Nourani ^{1 *} , Razieh Jahandari ²

1 - Assistant Professor, Department of Accounting, Hormozgan University, BandarAbbas, Iran.
2 - Master of Accounting, Department of Accounting, Payame

Received: 2024-05-03 Accepted : 2024-12-06 Published : 2024-12-20

Keywords: Audit quality, Risk taking, Firm Value, Firm size.,

Abstract :

Objectives: The present study aims to investigate the relationship between audit quality and risk-taking behavior in firms, focusing on the mediating role of company size in value creation.

Design/methodology/approach: This research is applied and employs a causal correlation methodology. The statistical population consists of all firms listed on the Tehran Stock Exchange. A systematic sampling method was utilized to select 140 firms as the study sample, covering a period of 7 years from 2017 to 2022.

Findings: The hypotheses were tested using simple and multiple linear regression analyses after verifying classical assumptions and applying the Chow test due to the mixed nature of the research data. The results indicate that both audit quality and risk-taking have a positive and significant effect on value creation. Additionally, company size plays a crucial mediating role in the relationship between audit quality, risk-taking, and value creation.

Innovation: This ongoing research provides compelling evidence that effective political communication can mitigate the risk of lawsuits against auditors, thereby enhancing audit quality. These findings underscore the importance of integrating governance practices that foster transparency and accountability in financial reporting.

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