Measuring the Impact of Companies' Political Connections on Audit Quality (An Empirical Study on Egyptian Joint Stock Companies)

Document Type : Original Article

Authors

1 Department of Accounting and Auditing, Badr Academy for Science and Technology

2 Department of Accounting and Auditing, Faculty of Commerce, Benha University

Abstract

Purpose: The primary objective of this study is to examine the impact of corporate political connections on audit quality.
Design and Methodology:
To achieve the research objective, the researcher conducted an empirical study using a sample of 88 publicly traded companies listed on the Egyptian Stock Exchange over the period from 2018 to 2022, with a total of 438 observations. The study aims to test the research hypothesis, which reflects the relationship between corporate political connections and audit quality.
Results and Recommendations:
There is a positive relationship between companies' political connections and audit quality. Conversely, there is a negative relationship between the degree or strength of political connections (in companies with more than one type of political connection) and audit quality. Based on this, the study recommends enhancing the role of audit committees in monitoring political connections, ensuring their positive impact on audit quality, and avoiding multiple types of political connections within companies to mitigate the negative effects arising from the strength of these connections. The focus should be on the most beneficial and positively impactful connections to increase transparency and reduce conflicts of interest.

Keywords

Benha Journal of Humanities Sciences
Volume 3, Issue 2
March and April 2024
Pages 79-111

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