Audit Quality and Agency Cost

Since the advent of industrialization, there has been the presence of a bond between the people who invest and the people who manage those investments, forming a vital relationship amongst the two groups. Although with the rise of such relationships, the soaring issues of trust and confidence have been a hindrance in economic growth. Viewing the high percentage of the capital of investors or shareholders in companies being utilized to cover the costs of bearing these barriers, it is clear that the audits are being considered a necessity in the business model for the shareholders so that they are assured that their investments are secure and are ensured that they are being properly rewarded in return.

The fundamental purpose of audits has been to reinforce trust and promote confidence in the financial information that the management publishes for the shareholders. Bearing this in mind, it...
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