Factors affecting voluntary rotation in independent audit: A research on BIST companies

In Turkey, there is no obligation to inform the public about the reasons why publicly traded companies have changed their independent audit firms result of voluntary rotation. This is a major deficiency for information users such as creditors, investors and brokerage houses who want to have an idea about the issues such as company performance, audit quality, etc. Due to this deficiency, in the study, it has been researched why the public companies in Turkey changed the independent audit firms result of voluntary rotation and which factors were influential in this change. The study's data set consists of annual reports, financial statements, audit reports and company news of 1169 companies of 8 different sectors which are traded uninterruptedly in the Istanbul Stock Exchange (BIST) index between 2011 and 2017. Research hypotheses have been established in the literature by using variables such as previous audit opinion, audit firm size, company's financial condition, company's size, change in company management, company merger, independence of company management and effect of debtholders which are most commonly used in Turkey sample. Binary logistic regression analysis was used for data analysis. At the end of the study, it has been detected that the likelihood of a publicly traded company controlled by the four major independent audit firms (KPMG, PwC, Deloitte ve Ernst&Young), receiving an audit report other than the previous year's positive opinion and financially distressed, is more likely to change the independent audit firm.