International Business Management

Year: 2016
Volume: 10
Issue: 22
Page No. 5387 - 5396

Audit Firms-Clients Relationships: A Socio-Economic Theory Perspective

Authors : Gholam Hossein Mahdavi and Abbas Ali Daryaei

Abstract: Emphasizing the game theory and exchange theory, this study is seeking to justify auditors and clients’ types of behaviors with respect to Socio-Economic theory. The most important issue, influencing this relationship is the audit fee. According to the Walrasian stability, many factors such as client size, complexity of company operations, type of auditing, institutional investors ownership, managers ownership, inflation etc are specified by the balanced audit fee. According to sequential rationality and signaling game in auditing, it was also shown that the signals sent by auditors and clients, resulting from their strategies would have important roles in their balance type. Finally, the payoff matrix was employed to determine the optimum level of audit fee. It was indicated that an optimum level could be determined in accordance with auditor-client strategies.

How to cite this article:

Gholam Hossein Mahdavi and Abbas Ali Daryaei, 2016. Audit Firms-Clients Relationships: A Socio-Economic Theory Perspective. International Business Management, 10: 5387-5396.

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