本科毕业论文（设计）
外 文 翻 译
外文题目 Audit quality and the relationship between auditee’s
agency problems and financial information quality
外文出处 Department of Accounting and Finance
University of Vaasa
外文作者 Johanna Miettinen
原文：
Audit quality and the relationship between auditee’s agency problems and financial information quality
Abstract
This study examines the role of audit quality on the relationship between auditee’s agency problems and financial information quality. It contributes to the existing literature by considering agency theory and audit research concerned with audit quality. The following hypotheses are tested based on the underlying literature: 1) Auditee’s agency problems are positively associated with audit quality, 2) Audit quality is positively associated with financial information quality, and 3) Audit quality mediates the relationship between auditee’s agency problems and financial information quality. To provide insight on the above hypotheses a path analysis is employed for a sample of 932 S&P 1500 firms. Auditee’s agency problems are measured by leverage, management ownership and free cash flow. Moreover, audit quality is measured by audit fees and non-audit services fees (i.e. total fees) paid to the incumbent auditor. Finally, financial information quality is measured by absolute discretionary accruals. The results reveal that auditee’s agency problems are positively associated with audit quality. In addition, it is found that audit quality increases financial information quality. Finally, it is documented that audit quality is a potential mediator in the relationship between auditee’s agency problems and financial info
rmation quality. These findings imply that auditees’ agency problems explain the demand for a high quality auditor. Furthermore, these results suggest that high audit quality successfully fulfils its role as a monitoring mechanism which purpose is to assure financial information quality.
1. INTRODUCTION
This study investigates the role of audit quality on the relationship between auditee’s agency problems and financial information quality. Audit quality is one of the most important issues in audit practice today. The quality of the financial information is dependent, among other things, on audit quality (ISB 2000). Several individuals and groups have an interest in the quality of audited financial information. External financial statement users, including current and potential investors, creditors, and others need reliable financial information on which to base their resource allocation decisions. Auditees, including management, audit committees, and boards of directors have an interest in quality audits, for example, to help to reduce the cost of capital. In addition, regulators and standard setters can increase the
effectiveness of capital markets by promulgating rules and regulations that help ensure that audits improve financial information quality (ISB 2000).
However, there have been concerns about audit quality in the present audit environment, where severe audit failures have come to light. It has been found that the
perceived reliability of audited financial information has declined. In contrast, the perceived relevance of audited financial information has increased (Hodge 2003). Thus, it is evident that there is a need for further research on audit quality and how it is related to financial information quality.
Audit quality has received considerable interest in both agency and audit research. According to agency literature one implication of agency problems is management propensity to produce substandard financial information (e.g. Warfield, Wild & Wild 1995; Chung, Firth & Kim 2005; Richardson 2006). Auditing provides assurance about the quality and credibility of company’s financial information and thus, is considered a means to mitigate agency problems (Jensen & Meckling 1976). Consequently, studies on agency iss
ues have focused on the demand side of auditing and examined how the level of auditee’s agency problems affects the demand for audit quality (e.g. Jensen et al. 1976; DeFond 1992; Parkash & Venable 1993; Nikkinen & Sahlström 2004; Lennox 2005). On the other hand, audit research has concentrated on the supply side of audit quality and investigated how audit quality is reflected in financial information quality (e.g. Frankel, Johnson & Nelson 2002; Geiger & Rama 2003; Larcker & Richardson 2004).
No previous research, however, has attempted to adapt both agency and audit research to investigate audit quality. Thus, the objective of this research is to combine the demand and supply side perspectives of audit quality. More specifically, this study produces an integrated model of the determinants of financial information quality which includes variables concerning agency problems and audit quality. The modeldepicts relationships between measures of auditee’s agency problems, audit quality and financial information quality.
1.1. Research problem
The purpose of this study is to examine the role audit quality plays on the relationship between agency problems and financial information quality. Although previous studies have uncovered important indicators of financial information quality, the paths between these indicators have not been explored. Accordingly, this research proposes and tests a model that establishes paths between auditee’s agency problems and audit quality as well as audit quality and financial information quality. In the proposed model, audit quality is expected to have a mediating role on the relationship between auditee’s agency problems and financial information quality. The mediating role maintains that audit quality is caused by agency problems and a cause of financial
documented翻译information quality.
The model is summarized in figure 1. The theoretical concepts of the model are illustrated at the top of the figure. These are agency problems, audit quality and financial information quality. Operational measures for the variables are illustrated at the bottom of figure 1.
Auditee’s agency problem is the independent variable in the model. Agency problems relat
e to potential conflicts of interests between management and shareholders or management and debt-holders. It is suggested that certain company specific characteristics affect the magnitude of agency problems. In this research agency problems are measured by leverage, management ownership and free cash flow. The model suggests that a company faces more severe agency problems when it has high leverage, low management ownership and high free cash flow. It is suggested that agency problems increase the demand for audit quality.
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