Reviewing relationship between audit institute size and audit quality

Purpose of this paper is to examine relationship between auditor size and audit quality (abnormal accruals) in firms listed in Tehran Stock Exchange during the years 2006–2014. This means that if size of audit firm is an important determinant of audit quality or not? To empirically test variables, audit quality is measured by unsigned abnormal accruals based on ball-Shivakumar and Kothari models and results of audit are investigated with only big institution, audit organization, in Iran. In this study, the panel data is used to test hypotheses. The results show that the size of the audit firm has significant negative relationship with audit quality. This negative correlation indicates that big audit firms with high client numbers, compared to small audit firms with low client numbers have lower audit quality.