Research Article
Leveraging External Audit Quality to Boost Stock Returns: Context Bangladesh
Mohammad Shamsus Sadekin,
Syed Zabid Hossain*
Issue:
Volume 14, Issue 3, June 2026
Pages:
139-150
Received:
31 May 2026
Accepted:
10 June 2026
Published:
3 July 2026
DOI:
10.11648/j.jfa.20261403.11
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Abstract: The aim of this research is to investigate the effect of external audit quality; Big 4, joint audit, audit tenure, audit firm change, audit fee on stock returns. Design/methodology/approach - In this study, 408 company-year observations from 6 years of data on 68 leading listed firms on the DSE from 2019 to 2024 are studied. The predictor variables in this research comprise corporate governance procedures, including policies and devices that facilitate a firm's direction and performance, as audited by a Big 4 audit firm, audit tenure, audit firm change, audit fee, and institutional ownership. The study finds that a company audited by a Big 4-affiliated audit firm, joint audit, audit tenure and the number of staff in the audit firm significantly enhance stock returns, but the impacts of audit firm changes and audit fees do not significantly influence stock returns. This study is not free from limitations. First of all, unavailability of financial statement data of audit firms in any data sources is the major limitation of this study. Then financial crisis is also a limitation for collecting sufficient data. It would be better if we could collect data from more firms and for more time. The study suggests the policymakers and regulatory bodies to imply the rules to do audit possibly by big 4 affiliated firms, joint audit, should give logical time for audit activities completion to enhance stock returns. The audit firm must be rich by sufficient stuff who directly engaged in audit functions. This is an original work and have not yet been submitted to any other journal for publication. This study contributes to the existing literature on the external audit attributes and stock returns.
Abstract: The aim of this research is to investigate the effect of external audit quality; Big 4, joint audit, audit tenure, audit firm change, audit fee on stock returns. Design/methodology/approach - In this study, 408 company-year observations from 6 years of data on 68 leading listed firms on the DSE from 2019 to 2024 are studied. The predictor variables...
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