Auditing quality between share price and liquidity regarding investor’s decision

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Abstract

Financial statements and the fact that many investors depend on the most critical outputs of the auditing quality. We documented the impact of audit quality as measured by audit firm size, tenure, fees, and firm experience on the stock prices and the liquidity of stock companies listed on the Amman Stock Exchange (ASE). The research adopted the deductive approach considering the least squares dummy variable approach following Pham et al. (2020), Sumiadji et al. (2019), Ugwunta et al. (2018), and Al-Thuneibat et al. (2011) to study the relationship between time-varying predictors and outcomes of 185 shareholding companies listed on ASE from 2016 to 2020. The characteristics of an audit firm vary in their effects on both the stock price and the liquidity. Management of the listed companies should be discussed to address the barriers that limit the impact of audit quality on the reliability of information associated with financial statements aiming to reduce information asymmetry and boost investor confidence, and then the share price should rise, and smaller audit firms should be encouraged to perform more specific audit assignments.

Keywords: Auditing Quality, Investors’ Decisions, Stock Price, Liquidity, Amman Stock Exchange (ASE), Jordan

Authors’ individual contribution: Conceptualization — N.T. and R.H.A.; Methodology — R.H.A.; Formal Analysis — R.H.A.; Investigation — N.T. and R.H.A.; Data Curation — N.T. and R.H.A.; Writing — Original Draft — N.T. and R.H.A.; Writing — Review & Editing — N.T. and R.H.A.; Visualization — N.T. and R.H.A.; Supervision — R.H.A.; Project Administration — N.T. and R.H.A.

Declaration of conflicting interests: The Authors declare that there is no conflict of interest.

JEL Classification: C22, G10, G11

Received: 06.06.2022
Accepted: 10.01.2023
Published online: 13.01.2023

How to cite this paper: Thuneibat, N., & AlHalaseh, R. H. (2023). Auditing quality between share price and liquidity regarding investor’s decision. Journal of Governance & Regulation, 12(1), 22–32. https://doi.org/10.22495/jgrv12i1art2