The Effect of CEO's financial knowledge on Audit Quality: Considering the Moderating Effect of Managerial Ability CEO's financial knowledge

This study examines the association between CEO's financial knowledge and audit quality by Considering the Moderating Effect of Managerial Ability. Financial expert CEOs have a vital role to play in making financial decisions and accountancy policy. In this regard, one of the most important and influential information transmitted to the capital market is the audited financial statements and the opinion of the independent auditor. Therefore, the present study seeks to investigate the effect of CEO's financial knowledge and management ability on audit quality and also to investigate the effect of management ability on the relationship between CEO's financial knowledge and audit quality. The statistical population of this research is all companies listed on the Tehran Stock Exchange and the statistical sample includes 147 companies during the years 2011 to 2020 that have been selected by systematic elimination method. To test the hypotheses of this research, combined data and multivariate regression using generalized least squares method have been used. The results show that the CEO's financial knowledge has a positive and significant effect on audit quality. The Managerial Ability also has a positive and significant effect on audit quality.Another result of the study indicates that management ability does not have a significant effect on the relationship between CEO's financial knowledge and audit quality.