Title: Auditor's knowledge and firms' investment decisions in MENA countries: evidence from Tunisian context

Authors: Asma Masrouki; Walid Houcine

Addresses: Emirates College of Technology (ECT), P.O. Box 41009, Abu Dhabi, UAE; Higher School of Economic and Business of Tunis (ESSECT), University of Tunis, Tunisia ' ISET Sousse, University of Sousse, Tunisia

Abstract: We investigate whether auditor' knowledge is associated with firm-level investment efficiency for Tunisian listed firms, after controlling for firms' overall level of financial reporting quality. We find that auditor' knowledge is positively associated with investment efficiency. The association between auditor's knowledge and investment efficiency seems to be independent of firms' financial reporting quality. Overall, our findings indicate that audit enhances the process of information production and through its insurance and/or assurance roles, provide investors with confidence which, in turn, causes managers to better allocate firm resources, and ultimately resulting in increased investment efficiency.

Keywords: auditor' knowledge; auditor reputation; big 4; auditor industry expertise; capital investment efficiency; MENA market.

DOI: 10.1504/IJMFA.2019.097830

International Journal of Managerial and Financial Accounting, 2019 Vol.11 No.1, pp.57 - 72

Accepted: 18 Oct 2018
Published online: 13 Feb 2019 *

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