Corporate Governance and Audit Quality: Evidence from Pakistan

Abstract

The thought that producing an excellent audit report will boost issuers' trust in financial reports is the driving force for this study. The main focus of the study is how corporate governance affects how well business audits are performed. 71 non-financial firms took part in the study between 2008 and 2015. A fake variable with the values "1" and "0" was used to evaluate the audit quality; a value of "1" meant the company used one of the "big four" auditors, while a value of "0" meant it did not. Board independence was calculated using the ratio of non-executive directors to total directors as a measure of corporate governance. Binary regression analysis was used to examine the data that was gathered. The findings show that board independence and audit quality are negatively correlated. The study emphasizes how important it is to make sure that the board has a suitable balance of expertise. The analysis suggests that the current makeup of the board should be preserved and enhanced with regard to the number of non-executive directors.