The Effects of Information Asymmetry and Documentation on Audit Quality: Evidence from Public Institutions in Ethiopia

Abstract

Tahir Desta

The overall objective of this study is to explore the effects of information asymmetry and documentation on audit quality in Ethiopia. In addition to information asymmetry and documentation, the study added controlling variables such as au- ditor independence, audit evidence, professional competence, and experience. A sample of 250 was selected using simple random sampling techniques. An ordered logistic regression is used to test the relationship between audit quality and explanatory variables. The findings indicated that audit evidence, professional competence, documentation, and auditor experience positively influence audit quality, while information asymmetry and auditor independence negatively and significantly affect audit quality. The contribution of this study lies in the potential value of the agency and monitoring hypothesis theory to overcome information asymmetry. Further, this study provide prized input to the government and various public institutions in Ethiopia in designing the effective controlling mechanism that increase audit quality

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