Are You Being Fooled? Audit Quality and Quality of Government

22 Pages Posted: 14 Jan 2004

See all articles by Ahmed Riahi-Belkaoui

Ahmed Riahi-Belkaoui

University of Illinois at Chicago - Department of Accounting

Date Written: January 2004

Abstract

We investigate the impact of audit quality on the quality of government in a large cross-section of countries. We assess government performance using measures of six dimensions of governance, namely, voice and accountability, political stability, government effectiveness, regulatory quality, rule of law and control of corruption. We assess audit quality by a variable indicating the percentage of firms in the country audited by the big 5 accounting firms. We find that countries that have a high level of audit quality exhibit superior government performance. The results based on 33 countries, persist after controlling for quality of life. Quality of life had a positive relationship with government performance. The importance of audit quality in explaining the variation in government performance across countries shed light on the strong role of auditing in society.

Keywords: Audit quality, government performance, quality of life

JEL Classification: M41, M43, M45, M47, M49

Suggested Citation

Riahi-Belkaoui, Ahmed, Are You Being Fooled? Audit Quality and Quality of Government (January 2004). Available at SSRN: https://ssrn.com/abstract=485764 or http://dx.doi.org/10.2139/ssrn.485764

Ahmed Riahi-Belkaoui (Contact Author)

University of Illinois at Chicago - Department of Accounting ( email )

601 South Morgan Street
University Hall, Room 2303
Chicago, IL 60607
United States
312-996-4400 (Phone)
312-996-4520 (Fax)

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