The Role of Corporate Governance Mechanisms and the Auditor's Specialty in Debt Contract Strictness

Violation of contractual conditions leads to the transmission of bad news due to poor performance and the expertise of auditors and regulatory mechanisms can be a factor in adjusting it. In this article, the purpose is to examine the role of strictness in the debt contract and the auditor's expertise.

In order to study the subject based on the logistic regression model, in the period 2012 to 2019, data of 113 companies listed on the Tehran Stock Exchange were collected and used to test research hypotheses.

The results of the first hypothesis of the research on the significant effect of auditing expertise in the industry on strictness in debt contracts have been confirmed. The second hypothesis of the research indicates that corporate governance mechanisms have a significant effect on the relationship between auditor expertise in the industry and strictness in debt contracts. Violation of the terms and obligations of debt contracts leads to the reflection of negative news in prices. In other words, corporate governance mechanisms in order to control and protect prices and also reduce the risk of information asymmetry for creditors, reduce the risk of managers and implement regulatory approaches to maintain the quality of financial statements that benefit Include creditors.