Component

Expertise and Independence

Tenure and Restatements

Image

Size

Non-audit services and rotation

Higher level of an audit firm’s relevant industry expertise increases audit quality.

0.851

Audit firm’s expertise is better able to deliver audit quality of high technical competence.

0.837

High level of independence leads to high audit quality.

0.697

Long auditor tenure leads to high audit quality.

0.883

Financial restatements of faulty statements negatively impact audit quality.

0.866

An audit firm’s concern about its image and reputation drives higher audit quality

0.853

Concern about sustaining auditee’s image or reputation stimulates higher audit quality delivery by the audit firm.

0.847

The bigger an audit firm, the higher the level of its audit quality.

0.840

A client’s corporate image is enhanced by the reputation of the bigger audit firm.

0.757

Non-audit services lead to higher audit quality.

0.822

Audit rotation improves audit quality.

0.776