Earnings Quality, Audit Quality, and Cost of Debt

Abstract

This study examines the relationship between audit quality and the cost of debt in Tehran Stock Exchange companies. Five audit quality proxies were used: firm size, audit fees, auditor change, modified audit opinion, and the audit committee. Additionally, nine earnings quality models were employed: Basu [1], Beaver and Ryan [2], Ohlson [3], Dechow et al. [4], McNichols [5], Kormendi and Lipe [6], Francis et al. [7], and Leuz et al. [8] The research methodology is applied, and data were extracted via library methods. The study period covers the years 2018 to 2024. A sample of 148 companies was determined using the systematic screening method. The results show that the audit quality index has a negative impact, while earnings quality has a positive impact on the cost of debt.