Determining Factors Affecting Audit Opinion: Evidence from Turkey

Ahmet Özcan


Abstract: The main objective of this study is to construct a model based on financial and non-financial variables to identify factors affecting audit opinions. To examine the usefulness of financial and non-financial variables in distinguishing between firms with an unqualified audit opinion and firms with an adverse audit opinion, the relationship that exists between independent variables and the type of audit opinion is investigated through logit model. The findings of empirical analysis shed light on the relationship between firm specific factors and the type of audit opinion. The results of logit analysis suggest that an unqualified audit opinion is issued for firms that have a higher liquidity, profitability, operational efficiency, growth rate, percentage of outside board members and low debt to total asset ratio. The results of empirical analysis demonstrate that financial and non-financial variables can be significantly useful in distinguishing between firms with an unqualified audit opinion and firms with an adverse audit opinion. Additionally, the inclusion of non-financial variables, age and the percentage of outside board members, significantly improves the performance of empirical model.   

Keywords: Audit opinion, Financial and non-financial variables, Going- concern assumption

JEL: M40, M41

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International Journal of Accounting and Financial Reporting  ISSN 2162-3082

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