The impact of ownership structure on external audit quality: A comparative study between Egypt and Saudi Arabia

This study aims to compare the impact of the ownership structure as one of the essential internal mechanisms of governance on the proxies of external audit quality on a sample of 82 listed Egyptian companies and 77 listed Saudi companies from 2014 to 2021, employing the OLS regression analysis. The current study found mixed results according to the type of ownership and indicators of the external audit quality, both in Egyptian and Saudi companies. The results showed a significant effect of board ownership, management ownership, and family ownership on audit quality. However, the direction of this effect varied between positive or negative in Egyptian or Saudi companies, and the effect was sometimes insignificant. On the contrary, the results showed an insignificant effect of government ownership on audit quality in Egyptian and Saudi companies, or the effect was sometimes significant. The study results may help investors and stakeholders understand the ownership structure’s role as one of the internal governance mechanisms on audit quality. Studies show the effectiveness of governance mechanisms, whether internal or external, according to the institutional environment from one country to another. It also contributes to the use of various indicators to measure the quality of auditing and the quality of financial reports, such as returning the financial statements as an indicator of financial reports and an indicator of audit quality at the same time.