Pages: 96-108

Abstract

The present research aims to investigate the relationship between institutional investors' ownership and financial leverage with audit quality in companies listed on Tehran Stock Exchange. it seeks to provide criteria for investors and creditors to describe the audit quality, so that by recognizing these features, they will realize audit quality and make their decisions in audited financial reports with more confidence. The population studied in the research includes companies listed in Tehran Stock Exchange during 2010-2014. The selected sample contains 90 companies with the described special features in this research. Analyzing the collected data through logistic multiple regressions based on the integrated data technique indicates a significant positive relationship between institutional investors’ ownership with audit quality of firms. Also companies with higher financial leverage are more interested to employ high quality auditors. The findings can be useful for managers, investors, policy makers of exchange and other stakeholders to make their decisions, in addition to fill research gaps in this area.