Auditor Characteristics and Bankruptcy Probability

The main purpose of this study is to investigate the relation between auditor characteristics and probability of bankruptcy. This study uses variables such as auditor fees, audit-firm size, audit-firm tenure, and auditor industry specialization as auditor characteristics. Also the study uses Altman (2000) and Kordestani at el (2014) as bankruptcy Indices. Data collected from 98 firms over the period 2005-2015 are analyzed using logistic regression. The results indicate that there is no significant relation between the auditor's characteristics and the probability of bankruptcy obtained through Altman's model. On the other hand, findings show that firms which have higher audit fees and are audited by large audit firms are more likely to default (calculated by the Kordestani model). In addition, firms audited by long-tenured auditor firms and industry-expert auditors are less likely to go bankrupt. ‌