The effects of client size, audit report, state ownership, financial leverage and profitability on auditor selection: Evidence from Iran

摘要

The purpose of this study is to identify the factors affecting the auditor selection in the listed companies of Tehran stock exchange (TSE) during a seven-year period from 2001 to 2007. Using logistic regression, the results of this research show that client size, profitability, qualified or adverse audit report in the prior year of auditor's selection and the state ownership are the main factors which affect auditor's selection. Research evidence indicates that privatization of auditing profession, motivates firms managers to select their auditors from private audit firms in order to get unqualified audit report. In this respect, large companies prefer to select private audit firms instead of audit organization (the government auditor) in Iran.