Auditor Selection in Borsa Istanbul

Abstract

The objective of this study is to examine the effect of firms' characteristics and audit quality in Turkey. This study provides additional insights for audit quality literature by examining how firms characteristic effect on clients’ incentives and abilities to demand high audit quality in Turkey. Turkey is one of the less developed and most under-researched capital markets in the world. This study used the data of 146 firms listed on Borsa Istanbul (BIST) over the period from 2011 to 2015. Using logistic regression, the findings explained that clients’ incentives and abilities to demand high audit quality weaken because of control-ownership wedge, which an unfavourable outcome for minority shareholders. Thus, this study proposes that regulators, particularly the Capital Market Board of Turkey (CMBT), should increase law enforcement to enhance good corporate governance in Turkey to accommodate the unique features of wedge firms and provide a protected environment for minority shareholders.