The impact of audit quality on trading suspension propensity; detection in Thailand

Abstract

Based on each direct evidence consists of actual cases disclosed by the Securities and Exchange Commission (SEC), and indirect evidence consists of suspected cases detected by the identification model of trading suspension propensity. This study aimed to examine the relationship between audit quality aspects and trading suspensions of listed companies in Thailand, as well as the changes in this relationship after the outbreak of the COVID-19 pandemic. The research utilized สำคัญ obtained from the annual reports and financial statements of 263 companies listed on the SET50 and MAI indexes, covering the periods of 2016 to 2018 and 2020 to 2022. The findings indicated that auditing practices contributed to enhancing the validation of the information contained in financial statements and reports. This, in turn, resulted in improved quality of financial information and reduced information asymmetry among users, thereby discouraging insider trading and market manipulation. Consequently, the probability of trading suspension was lowered without any notable difference observed during the COVID-19 period relative to the previous pandemic period. Furthermore, the study revealed that high-quality audit reports facilitated users' ability to predict future performance and expected returns of companies. The signals of audit quality were assessed using Audit Firm Size, Audit Switch, Audit Fees, Auditor Tenure, and Qualified Audit Opinion. The collected data underwent analysis employing Descriptive statistics, Correlation analysis and Ordered Probit estimations.