Social TiesTheory and Audit Quality : Experimental Evidence of Tehran Stock Exchange

In the present study, the empirical study of the effect of the simultaneous statehood of the CEO and the independent auditor, as well as the simultaneous change of the CEO and the independent auditor, on the quality of auditing within the framework of social ties theory. The statistical population in the present study is the Tehran Stock Exchange, of which 168 companies have been selected as the research sample in the period from 2009 to 2017. In order to perform statistical analyzes in the present study, multiple linear regression method using ordinary least squares (OLS) method with panel-constant effects approach has been used. In order to measure audit quality, the criteria of discretionary  accruals based on Kotari et al. (2005), Jones (1991), Sloan et al. (1995) and Kaznik (1999) models were used. Findings from the analysis of research data show that the independent state variability of simultaneous CEO and independent auditor reduces the quality of auditing. But the independent variable of simultaneous change of the CEO and the independent auditor increases the discretionary accruals. Based on these findings, it can be concluded that the audit quality of financial statements of companies operating in the Iranian capital market can be explained by the theory of social dependence.