%0 Journal Article
%T The Role of Operations Complexity in the Effect of Auditing Quality on Banks' Risk
%J Financial Research Journal
%I University of Tehran
%Z 1024-8153
%A Namazi, Navid Reza
%A Esmaeilpour, Hassan
%D 2021
%\ 11/22/2021
%V 23
%N 3
%P 440-465
%! The Role of Operations Complexity in the Effect of Auditing Quality on Banks' Risk
%K Z-score index
%K Income standard deviation index
%K Auditing indicators
%K Bank risk indicators
%K Complexity of bank operations
%R 10.22059/frj.2021.316006.1007114
%X Objective: The purpose of this study is to investigate the effect of audit indicators on the risk dimensions of banks listed on the Tehran Stock Exchange and OTC with emphasis on the mediating role of the complexity of operations.
Methods: The statistical population of the study is all banks listed on the Tehran Stock Exchange and OTC. The statistical sample included 16 banks (144 years-company) in the period 2008 to 2018. In order to analyze the interactive effect of variables, Structural Equation Modeling (SEM) was used and for pattern analysis, the partial least squares (PLS) approach was used using Smart PLS software.
Results: The results showed that among the banks listed on the Tehran Stock Exchange and OTC, auditing indicators have a negative and significant effect on the risk dimensions of banks and the complexity of banks' operations. In addition, using the Subel test, the results showed that the complexity of banks 'operations as an intermediary variable has a positive and significant effect on the relationship between audit indicators and banks' risk dimensions. Another important finding of the study was that using VAF statistics, it was found that 25 percent of the impact of total audit indicators on the dimensions of risk, is indirectly through the mediating variable of banking operations complexity.
Conclusion: According to the research findings, banks' risk is affected by the complexity of operations and audit dimensions affect these two factors. Therefore, the size of the auditor, change and tenure of managers and the audit firm, the percentage of distortions detected and reported, the auditor's expertise and knowledge of the banking industry, reputation and audit quality control index have a significant effect on the complexity of operations and risk of banks. The auditor should be considered by the bank managers. This finding is also important in determining the management and audit team in audit firms.
%U https://jfr.ut.ac.ir/article_85053_f11937154f5796107fe95bd9b35f6964.pdf