Audit Quality and Stakeholder Confidence: Empirical Evidence on Investor Perceptions in an Emerging Market Context
DOI:
https://doi.org/10.5281/zenodo.19839473Keywords:
Keywords: audit quality; stakeholder confidence; investor perceptions; financial-report credibility; transparency of audit reportingAbstract
This study investigates how perceived audit quality shapes investor confidence in audited financial statements within an emerging market context. Drawing on agency theory, signaling theory, and credibility theory, the research examines three dimensions of audit quality—auditor independence, auditor expertise, and transparency of audit reporting—as determinants of financial-report credibility and investor confidence. A cross-sectional quantitative design was employed, with primary data collected from 186 respondents via a structured Likert-scale questionnaire. Data were analysed using descriptive statistics, reliability analysis, exploratory factor analysis, Pearson correlation, multiple regression analysis, and bootstrapped mediation testing. Findings indicate that transparency of audit reporting is the only dimension to exert a statistically significant positive effect on financial-report credibility (B = 0.153, p = .047). Perceived audit quality did not significantly predict investor confidence (p = .722), and investor confidence did not mediate the relationship between perceived audit quality and investment intention. Despite the non-confirmation of two hypotheses, the study provides directional evidence that visible, communication-based audit signals carry greater salience for investors than abstract assurance attributes. The findings carry implications for audit firms, regulators, and standard-setters with respect to audit-report design and transparency reforms. Future research should employ refined instruments, larger purposive samples, and experimental designs to establish causal inference.
