Studying the impact of corporate governance and audit quality onthe profitability of companies

Profit quality is one of the important features of financial reports that affects the optimalallocation of resources; Because profit is considered one of the main inputs of investors' andanalysts' evaluation patterns. The purpose of this research is to investigate the simultaneouseffect of corporate governance and audit quality on the quality of accounting profit usingstructural modeling. For this purpose, the information of the companies in the ten-year intervalfrom ۲۰۰۵ to ۲۰۱۸ was examined. Structural equation modeling with partial least squares(PLS) approach and Smart-PLS software were used for data analysis. The results of theresearch show that corporate governance and audit quality directly and indirectly (through themediating variable of financial performance) have a significant positive effect on profit quality;But through the mediating variable of capital structure, they have a significant negative effect.In addition, the findings show that the direct effect of corporate governance and audit qualityon profit quality is stronger than their indirect effect.

Keywords:

Profit quality , corporate governance , audit quality , capital structure , structuralequations