Audit Quality and Corporate Governance: Evidence from the Microfinance Industry

20 Pages Posted: 13 Oct 2015

See all articles by Leif Atle Beisland

Leif Atle Beisland

University of Agder

Roy Mersland

University of Agder

R. Øystein Strøm

OsloMet - Oslo Metropolitan University

Date Written: November 2015

Abstract

This study uses a unique hand‐collected sample of for‐profit and nonprofit microfinance institutions from 70 developing countries to analyse the relationships between audit quality and governance mechanisms. We examine two measures of audit quality, namely, the use of Big Four auditors and the presence of internal auditors. The empirical analysis of this study reveals that these two quality metrics are highly related, although we also demonstrate that these metrics capture distinctive aspects of audit quality. In particular, the presence of internal auditors is related to other indicators of stricter governance, whereas the use of Big Four auditors is generally unrelated to other governance mechanisms. For situations in which a significant relationship between audit quality and governance does exist, the sign of this relationship is always positive. Thus, our data support the complementarity view of these two traits that is espoused by prior research.

Keywords: Audit quality, governance, microfinance, Big Four, internal audits, for‐profit organizations, non‐profit organizations

Suggested Citation

Beisland, Leif Atle and Mersland, Roy and Strøm, Reidar Øystein, Audit Quality and Corporate Governance: Evidence from the Microfinance Industry (November 2015). International Journal of Auditing, Vol. 19, Issue 3, pp. 218-237, 2015. Available at SSRN: https://ssrn.com/abstract=2673248 or http://dx.doi.org/10.1111/ijau.12041

Leif Atle Beisland (Contact Author)

University of Agder ( email )

Serviceboks 422
Kristiansand, VEST AGDER 4604
Norway

Roy Mersland

University of Agder ( email )

Serviceboks 422
N-4604 Kristiansand, VEST AGDER 4604
Norway

HOME PAGE: http://www.uia.no/microfinance

Reidar Øystein Strøm

OsloMet - Oslo Metropolitan University ( email )

P.O. Box 4
Oslo, 0130
Norway
+47 97968500 (Phone)

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
1
Abstract Views
961
PlumX Metrics