The Effect of Corporate Governance Mechanisms on Audit Quality by Explaining the Intermediary Function of Auditor's Behavioral Components

Document Type : Original Article


1 Ph.D. Candidate, Department of Accounting, Allameh Tabataba'i University, Tehran, Iran.

2 Faculty Member, Department of Accounting, Allameh Tabataba'i University, Tehran, Iran.


The purpose of this study was to investigate the structural pattern of the effect of corporate governance mechanisms (internal organization) on audit quality considering the role of the intermediary variable of behavioural components of auditors. The statistical population of this research is independent auditors and auditors working in audit firms. A sample of 395 people was selected by simple random sampling method. In this research, the correlation coefficient, hierarchical regression and Structural Equation Modeling (SEM) were used for statistical analysis. The results of the correlation test and hierarchical regression model confirm the role of auditors' behavioural components in the relationship between corporate governance mechanisms and audit quality as mediators. Then, by adapting the research data and conceptual model, structural equation model was fitted to examine the effect of auditors ' behavioural factors as an intermediary variable. Finally, the significant effect of corporate governance mechanisms on audit quality was demonstrated by explaining the mediating role of auditors' behavioural components.


  • Sensational Yeganeh, Yahya and Kaveh Azin Far. (1389). The relationship between audit quality and audit firm size. Accounting and auditing reviews. Volume 17. Number 61. p. 85 to 98.
  • Sensitive One, Yahya. (1395). The Effect of Corporate Governance Mechanisms on Audit Quality and Real Profit Management. Empirical Accounting Research. Volume 5. Number 4. Summer, 1395. p. 23-45.
  • Shayesteh, Hadi and Tabatabai, Sajjad and Kaviani, Mohsen and Taheri Fard, Ahmad Reza (1394). Investigating the relationship between corporate governance and audit quality in listed companies in Tehran Stock Exchange. Proceedings of the Third International Accounting and Management Conference.
  • Karami, Gholamreza and Vakili Far, Hamid Reza and Mehinani, Mehdi (1395). Investigate the relationship between time pressure, the complexity of work and audit effectiveness in the National Court of Audit. Audit knowledge. Number 63. Sixteenth Year. Summer 1395
  • Mashayekhi, Bita and Mehrani, Kaveh and Rahmani, Ali and Madahi, Azadeh (1392). Compilation of audit quality model. Stock Exchange Quarterly. Number 23. Fall 20132. Sixth year. Pp. 103-137.
  • Adjaoud, F., & Ben‐Amar, W. (2010). Corporate governance and dividend policy: shareholders’ protection or expropriation?. Journal of business finance & accounting, 37(5‐6), 648-667.
  • Anis, A., & Anis, A. (2017). Auditors’ and accounting educators’ perceptions of accounting education gaps and audit quality in Egypt. Journal of Accounting in Emerging Economies, 7(3), 337-351
  • Aubin, D. (2013). Analysis: Knives out for auditors as class actions go global lawsuitsidUSBRE92K0QB20130321
  • Baker, M., & Gompers, P. A. (2003). The determinants of board structure at the initial public offering. The Journal of Law and Economics, 46(2), 569-598
  • Black, B. S. Kim T, Chang. and Park, Love, I., Rachinsky, A. (2009). Corporate governance indices and firms' market values: Time series evidence from Koria, Emerging Markets Review.
  • Cohen, J., Krishnamoorthy, G., & Wright, A. M. (2002). Corporate governance and the audit process. Contemporary accounting research, 19(4), 573-594.
  • Coram, P., J. Ng, and D. R. Woodliff. 2004. The Effect of Risk of Misstatement on the Propensity to Commit Reduced Audit Quality Acts under Time Budget Pressure. Auditing: A Journal of Practice and Theory 23(2):161-169.
  • Dickinson, D., & Villeval, M. (2008). Does monitoring decrease work effort? The complementarity between the agency and crowding-out theories. Games and Economic Behaviour, 63(1), 56-76.
  • Elder, R. J., M. S. Beasley, and A. A. Arens. 2010. Auditing and assurance services: An Integrated Approach. Pearson Prentice Hall.
  • Engel, E., Fischer, R., & Galetovis, A. (2002). A new approach to private roads. Regulation, 25, 18.
  • Ghafran, C., & O'Sullivan, N. (2017). The impact of audit committee expertise on audit quality: Evidence from UK audit fees. The British Accounting Review.
  • Gürünlü, M. (2009). The evolution of corporate governance mechanisms after going public: evidence from Turkish panel data. International Journal of Economic Perspectives, 3(1), 59.
  • Haka, ,  and  P.  Chalos.  1990.  Evidence of agency conflict among management, auditors, and the audit committee chair.  Journal of Accounting and Public Policy 9 (4):271-292.
  • Herrbach,   2001.  Audit quality, auditor behaviour and the psychological contract.
  • Hope, O. K., Hu, D., & Zhao, W. (2017). Third-party consequences of short-selling threats: The case of auditor behaviour. Journal of Accounting and Economics, 63(2), 479-498
  • Jain, B. A., & Kini, O. (1999). The life cycle of initial public offering firms. Journal of Business Finance & Accounting, 26(9‐10), 1281-1307.
  • Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behaviour, agency costs and ownership structure. Journal of financial economics, 3(4), 305-360.
  • Kang, M., Lee, H. Y., Son, M., & Stein, M. (2017). The association between human resource investment by audit firms and their audit quality. Asia-Pacific Journal of Accounting & Economics, 24(3-4), 249-271.
  • Kapopoulos, P., & Lazaretou, S. (2007). Corporate ownership structure and firm performance: evidence from Greek firms. Corporate Governance: An International Review, 15(2), 144-158.
  • Leventis, S., Weetman, P., & Caramanis, C. (2011). Agency costs and product market competition: The case of audit pricing in Greece. The British Accounting Review, 43(2), 112-119.
  • Lord,   T.,  and  F.  Todd  DeZoort.  2001.  The impact of commitment and moral reasoning on auditors' responses to social influence pressure.  Accounting, Organizations and Society 26(3):215-235.
  • Mahdavi, G., & Daryaei, A. A. (2017). Attitude toward the business environment of auditing, corporate governance and balance between auditing and marketing. Contaduría y Administración.
  • Masoud, N. (2017). An empirical study of audit expectation-performance gap: The case of Libya. Research in International Business and Finance, 41, 1-151.
  • McNair, C. J. 1991. Proper Compromises: The Management Control Dilemma in Public Accounting and its Impact on Auditor Behaviour. Accounting, Organizations and Society 16(7): 635-653.
  • Minnis, M., & Sutherland, A. (2017). Financial statements as monitoring mechanisms: Evidence from small commercial loans. Journal of Accounting Research, 55(1), 197-233.
  • Mohanty, P. (2004). Institutional investors and corporate governance in India. Retrieved from
  • Nehme, R. (2017)," Performance Evaluation of Auditors A Constructive or a Destructive Tool of Audit Output ", Managerial Auditing Journal, Vol. 32 Iss 2 pp.
  • O'Connell, Vincent & Cramer, Nicole. (2010). The relationship between firm performance and board structure in Ireland. European Management Journal. 28. 387-399. 10.1016/j.emj.2009.11.002.
  • Osioru, N. M. (2017). Effect of Auditing on Management of the Public Finances in Kenya: The Case of Government Ministries. Strategic Journal of Business & Change Management, 4(2).
  • Porter,   E.  1998.  Competitive advantage: Creating and sustaining superior performance.Free press.
  • Ritter, J. R., & Welch, I. (2002). A review of IPO activity, pricing, and allocations. The Journal of Finance, 57(4), 1795-1828
  • Sharma, V. D., & Kuang, C. (2014). Voluntary audit committee characteristics, incentives, and aggressive earnings management: evidence from New Zealand. International Journal of Auditing, 18(1), 76-89.
  • Sun, J., Lan, G., & Liu, G. (2014). Independent audit committee characteristics and real earnings management. Managerial Auditing Journal, 29(2), 153-172.
  • Ucar, E. (2015). Do Reputable Financial Intermediaries Help Firms in External Financial Markets? Effect of Auditor Reputation on SEO Transaction Costs. Journal of Accounting and Finance, 15(6), 104.
  • Ussahawanitchakit, P. (2012). Audit independence of tax auditors in Thailand: Roles of ethical orientation, professional responsibility, stakeholder pressure, and audit experience. Journal of Academy of Business and Economics, 12(1), 1-11.
  • Welbourne, T. M., & Andrews, A. O. (1996). Predicting the performance of initial public offerings: should human resource management be in the equation?. Academy of management journal, 39(4), 891-919.
  • Zaka, V. (2006).corporate governance and firm performance and audit quality. journal of financial economy.