The effect of the audit report on the relevance of accounting information

Abstract

To increase public confidence to invest in the stock of listed companies on the Stock Exchange, accounting information should have qualitative features such as relevance, reliability, comparability, and intelligibility. The accounts must be audited for users to trust this financial information. According to the separation of ownership and management, discussion of corporate governance as well as related theories have been proposed such as the agencies which have been proposed, the need to audit financial statements is absolutely necessary. The audit creates added value for financial statements. Thus, the aim of this paper is investigation the effect of the audit report on the relevance of accounting information. Testing hypotheses have been investigated by using cross-sectional data of 105 companies among the listed companies in Tehran Stock Exchange in 2011 to 2015. The results indicated that there is a significant relationship between the audit firm, the efficiency of assets, and the ratio of financial independence to the rate of efficiency; but the Stock returns has not been affected by audit report with independent variables. Fitting of the second hypothesis indicated that the return on assets and financial independence in companies with the conditional report is more than in companies with the qualified report. Also, the financial independence in companies which have been audited by large firms is greater than in companies which have been audited by other firms.