Rajgopal, S., Srinivasan, S., & Zheng, X. (2021). Measuring audit quality.

Question 1

Which audit quality proxy was the strongest overall predictor of audit deficiencies?

Answer 1

Restatements — predicted all top six audit deficiencies consistently.

Question 2

How did audit fee ratio (audit fees / total fees) relate to audit deficiencies?

Answer 2

Negatively — higher ratios predicted fewer deficiencies (i.e., higher audit quality).

Question 3

What does the presence of a city specialist auditor indicate?

Answer 3

Higher audit quality — it negatively predicts 5 out of the 6 top audit deficiencies.

Question 4

What does the presence of a Big N auditor typically indicate?

Answer 4

Generally associated with higher audit quality (fewer audit deficiencies).