Abstract:
This research aims to identify the effect of the audit committee on the audit
expectation gap and also consider the mediating effect of audit quality on corporate
governance and Audit expectation Gap.
The research samples of 194 non-financial companies have been selected
from the Pakistan Stock Exchange for the period from 2009-2018. Corporate
governance measured from ACind, ACsze, ACmeet, ACexp, audit quality measured
from audit firm size and audit expectation gap measured by proxy i-e difference
between market price and share price.
The finding of this research corroborates with existing research that
components of corporate governance have a significantly negative association with
the audit expectation gap whereas, they have a positive relationship with the
mediating variable, audit quality. Furthermore, findings show that audit quality has
significantly negatively associated with the audit expectation gap and it has
significantly mediated the relationship among governance-gap.
The recommendation of this research could develop proper enlightenment to
the public, investors, the regulators should employ potential investors about the audit
procedures and auditor’s role concerning fraud prevention and detection, and
professional accounting bodies and other stakeholders as this could help in reducing
the Audit Expectation Gap in Pakistan.
Keywords:
Corporate Governance,Audit Quality,Audit Expectation Gap,Audit Committee,Mediation Analysis,
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