Audit quality and audit firm reputation: Evidence from China

Abstract

The aim of this study was to evaluate the relationship between audit quality and audit firm reputation using a sample of listed companies in China. The Ordinary Least Square Model estimation technique was used to analyze the relationship between the audit firm reputation and audit quality. This study demonstrates a significant positive correlation between the audit firm's reputation and the audit quality. At the same time, the research results show that among the variables checked with the audit firm, except for total leverage of the company, all other variables are positively related to audit quality. Therefore, I recommend that superior companies give priority to firms with a higher reputation when hiring external audits.