International Journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN: 2313-626X

Frequency: 12

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 Volume 12, Issue 5 (May 2025), Pages: 156-167

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 Original Research Paper

Ownership structure, board characteristics, and audit quality demand: Evidence from Saudi-listed companies

 Author(s): 

 Fatma Zehri *

 Affiliation(s):

  Accounting Department, Business College, Al Imam Mohammad Ibn Saud Islamic University (IMSIU), Riyadh 12477, Saudi Arabia

 Full text

    Full Text - PDF

 * Corresponding Author. 

   Corresponding author's ORCID profile:  https://orcid.org/0000-0002-3837-7861

 Digital Object Identifier (DOI)

  https://doi.org/10.21833/ijaas.2025.05.015

 Abstract

This study examines the impact of ownership structure and board characteristics on the demand for high-quality audit services in Saudi-listed firms, drawing on agency and stakeholder theories. Using panel data from 162 firms listed on the Saudi Stock Market (Tadawul) between 2018 and 2023, audit quality is measured by auditor brand (Big Four vs. non-Big Four), with audit fees used as an alternative measure for robustness. A Two-Stage Least Squares (2SLS) regression with instrumental variables is applied to address endogeneity. The findings reveal that firms with higher foreign and institutional ownership are more likely to engage high-quality auditors, while family ownership has no significant effect. Additionally, greater board independence and gender diversity positively influence the demand for audit quality. These results are consistent across different measures of audit quality. The study offers valuable insights for investors, policymakers, and regulators, suggesting that promoting independent and diverse boards, along with encouraging foreign institutional investment, can enhance audit quality, reduce agency costs, and strengthen corporate governance in Saudi Arabia.

 © 2025 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license ( http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords

 Audit quality, Ownership structure, Board characteristics, Corporate governance, Saudi stock market

 Article history

 Received 19 October 2024, Received in revised form 6 April 2025, Accepted 5 May 2025

 Acknowledgment

No Acknowledgment. 

  Compliance with ethical standards

  Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

 Zehri F (2025). Ownership structure, board characteristics, and audit quality demand: Evidence from Saudi-listed companies. International Journal of Advanced and Applied Sciences, 12(5): 156-167

  Permanent Link to this page

 Figures

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 Tables

  Table 1  Table 2  Table 3  Table 4  Table 5  Table 6

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