The Impact of Audit Quality on Firm Performance: the Moderating Role of Ownership Concentration

Abstract

Purpose: The main objectives of this research were to study the direct relationship between audit quality (AQ) and the performance of non-financial Jordanian companies and to look into how ownership concentration affects this relationship. Theoretical framework: This research focuses on AQ, FP, and ownership concentration. Ownership concentration moderates the relationship between AQ and FP, according to the framework. Audit fees are used to evaluate AQ and lend credibility to financial reports, protecting shareholders' interests. Design/methodology/approach: The study was conducted on public companies listed on the Stock Exchange of Amman (ASE) in the services and industry sectors, with a total of 92 firms, from 2014 to 2018. The data analysis method used was partial least squares structural equation modelling (PLS-SEM). Findings: The study's findings suggest that AQ is positively linked to FP, and ownership concentration has a positive and significant effect on FP. Additionally, the moderating influence of ownership concentration confirms that AQ has a statistically significant impact on FP. Research, Practical & Social implications: The result of this article helps firm managers, regulatory agencies, and market participants on the ASE, as well as nations with highly concentrated ownership and policymakers, understand governance. Originality/value: This study is one of the first papers in the Jordanian context to address the role of moderating the effect of ownership concentration between AC and FP.