The Impact of Audit Quality on Financial Performance in Jordan

  • Laith Fouad Alshouha, Dr Wan Nur Syahida Wan Ismail, Dr Mohd Zulkifli Mokhtar, Dr Nik Mohd Norfadzilah Nik Mohd Rashid


Investors and capital providers are expressing growing concern about the information quality provided in annual reports. To date, however, few studies have been conducted related to audit quality and its impact on the performance of companies particularly in Jordan and developing countries in general. That was the motivation to conduct the current study and provide empirical evidence in this area. This study relies on data collected from the annual reports of 88 non-financial Jordanian companies listed on the Amman Stock Exchange (ASE) from 2009 to 2018. In total, the study contained 880 observations. The panel data approach was employed in this study due to the nature of the data collected. The current study measured the independent variable, which is audit quality (AQ) measured by the log of audit fees, and the independent variable, financial performance, measured by TOBIN'S Q (TQ). A multiple regression method was used to analyze panel data. The results showed there is significant and positive impact of AQ and financial performance. Moreover, cash flow from financing activities (CASHF) and Liquidity (LIQ) have a positive impact on the financial performance of companies listed on ASE, while Leverage (LEV) and firm size (SIZ) have an insignificant relationship with financial performance

Keywords- audit quality, Agency Theory, financial performance