The Effect of Moderating Audit Quality on Investor Sentiment in Stock Pricing

Several studies in Tehran Stock Exchange have examined the effect of audit quality on investment decisions in the market, but toward most of these studies are based solely on the principle of rationality of economic agents and documentation of the relationship between audit quality and stock price and the direct reaction of the market to the audit quality criteria are indicative of the effect of audits on the investors' decisions and rarely examine the role of independent auditors on the emotional behaviors investors in the market. So, this paper the main purpose is investigating the effect of moderating audit quality on investor sentiment in stock pricing. In this study, to measure the audit quality, it has been used the observable variables such as the type of audit opinion, audit size and investor sentiment was measured by using five criteria of microeconomic and two macroeconomic criteria. For this purpose, sample of 560 years-company, during the years 2009-2016 was investigated using modified multivariate regression. The results show that the auditor's reports strengthens investor confidence to accounting information and affect the investors' sentiment in stock pricing, but the size of the auditor is not moderating and has no effect on the investors' sentiment in the capital market.