The Effect of Audit Quality on Organization Capital

38 Pages Posted: 29 Mar 2022

See all articles by Andreas G. Georgantopoulos

Andreas G. Georgantopoulos

National and Kapodistrian University of Athens; Panteion University of Athens - Panteion University of Political and Social Sciences

Dimitris Konstantios

University of Piraeus

Vasilios-Christos Naoum

University of Piraeus

Georgios A. Papanastasopoulos

University of Piraeus - Department of Business Administration

Date Written: February 1, 2022

Abstract

The current study examines how audit quality affects firms’ intangible investments. Employing a sample of 33,518 firm-year observations of US-listed firms for the period 1999-2017, our empirical findings suggest that firms’ organization capital which is considered as the primary variable of a firm’s intensity of intangible investments, is associated with high audit quality measured by audit firm size, auditor tenure and audit fees. Sensitivity tests, alternative measures of organization capital, subsample analyses and tests for endogeneity issues indicate that the effect of audit quality on organization capital intensity remains valid. Our findings provide new insights in the related literature by showing that audit quality adds to the development of intangible investments, contributing to firms’ long-term performance horizon.

Keywords: Audit quality, Organization Capital, Audit Fees, Audit Tenure.

JEL Classification: E22; G30; G32; G10; G12; G14; G30

Suggested Citation

Georgantopoulos, Andreas G. and Konstantios, Dimitris and Naoum, Vasilios-Christos and Papanastasopoulos, Georgios A., The Effect of Audit Quality on Organization Capital (February 1, 2022). Available at SSRN: https://ssrn.com/abstract=4052088 or http://dx.doi.org/10.2139/ssrn.4052088

Andreas G. Georgantopoulos

National and Kapodistrian University of Athens ( email )

Greece

Panteion University of Athens - Panteion University of Political and Social Sciences ( email )

136 Sygrou
Athens
Greece

Dimitris Konstantios (Contact Author)

University of Piraeus ( email )

Karaoli and Dimitriou 80
80 KARAOLI & DIMITRIOU STREET
Piraeus, Attiki 18534
Greece

Vasilios-Christos Naoum

University of Piraeus ( email )

80, M. Karaoli & A. Dimitriou St.
Grigoriou Lampraki 21 & Distomou
Piraeus, 18533
Greece

Georgios A. Papanastasopoulos

University of Piraeus - Department of Business Administration ( email )

80, KARAOLI & DIMITRIOU,PIRAEUS
Piraeus, 18534
Greece

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