AUDIT QUALITY AND AUDITOR INDEPENDENCE: EVIDENCE FROM GOING CONCERN AUDIT OPINION

The aim of this paper is to provide insights about auditor independence, cornerstone of audit quality, using going-concern audit opinions in the Italian context. According to Knechel et al. (2013), we adopt the auditor’s opinion as a direct measure of audit quality. To enrich our study on auditor independence, this paper investigates also empirical evidence between auditor firm (and audit partner) rotation and audit quality. By analysing a sample of 244 Italian entities listed over the period 2005-2013, our research provides univariate analyses regarding the auditor independence and the audit quality using going-concern opinion, in the first phase. In the second phase, about how the auditor firm rotation and the audit partner rotation affect the probability to issue a going-concern opinion for listed financial distressed entities in Italy. Our findings suggest that the issue of a going-concern opinion is more probable when the audit firm changes rather than when the audit partner changes.