Does Audit Quality Matter for Firm Performance? Empirical Evidence from Pakistani Public Listed Companies

Abstract

The global financial crisis of 2007-08 raised several question marks on the disclosure of financial reports of companies and bent a need for transparent and independent audits for public listed companies. The purpose of this current study is to explore the impact of audit quality on firm performance. To do this, the current study applied disproportion stratified random sampling on all Pakistani public listed companies and constructed a cross-section data set of 150 firms that were operating in 2018. Furthermore, this study applied the Weighted Least Square technique and found that audit quality measured by an audit from Big-Four firms is a source of an increase in firm performance. These findings propose to the government and management of firms to make sure the implementation of a transparent and independent audit in all public listed companies.