The Effect of Industry Specialization, Auditing and Auditor Independence Tenure on the Cost of Equity

Subject Areas :

Hassan Chenari ¹ , Asiyeh Farazandehnia ²

1 - Department of Accounting, South Tehran Branch, Islamic Azad University, Tehran, Iran
2 - Islamic Azad University, South Tehran Branch, Tehran, Iran

Received: 2022-02-01 Accepted : 2021-08-03 Published : 2021-07-23

Keywords: cost of equity, Auditing Quality, Auditor Specialization,

Abstract :

This study investigated the effect of audit quality properties on the cost of equity in companies listed on the Stock Exchange in Tehran. Information required for the study of the financial statements of 80 companies in the period 1390-1395 were collected. In this study audit quality through metrics auditor industry specialization, auditor tenure, auditor independence and audit firm size and cost of equity is the ratio of an industry's profit used to price adjustment is used. The results of the study showed that the characteristics of audit quality and the cost of equity is a significant negative correlation. In other words, increasing the lead to reduced audit quality is the cost of equity.This study investigated the effect of audit quality properties on the cost of equity in companies listed on the Stock Exchange in Tehran. Information required for the study of the financial statements of 80 companies in the period 1390-1395 were collected. In this study audit quality through metrics auditor industry specialization, auditor tenure, auditor independence and audit firm size and cost of equity is the ratio of an industry's profit used to price adjustment is used. The results of the study showed that the characteristics of audit quality and the cost of equity is a significant negative correlation. In other words, increasing the lead to reduced audit quality is the cost of equity.

References:
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The Effect of Industry Specialization, Auditing and Auditor Independence Tenure on the Cost of Equity