Effects of Auditor Rotation and Audit Quality on Corporate Governance Practices in Zimbabwe Local Authorities - A Stakeholder Perspective

Abstract

The study aims to promote the impacts of auditor rotation (AR) and audit quality (AQ) on corporate governance (CG) reporting and practices in Zimbabwe local authorities. A sample of study consisting of 21 audit committee chairpersons and 47 chief audit executives was used. The data sample was analysed under the multiple regression model to explore the statistical significance of the relationships between AR, AQ and CG. Empirical results of the study indicate that AR and AQ which are directly related variables with CG, have a combined significantly positive effect on CG. This follows the multiple regression analysis having established a non-significant AR, being 0.001<AR>0.005, but a highly significant intercept and AQ coefficient. Therefore, it was concluded that as much we may observe an improvement in CG following AR, this relationship in not statistically significant. This entails that AR itself does not have power to affect corporate governance reporting and practices. Thus, only by affecting AQ, can AR make an actual difference to CG reporting and practices in Zimbabwe local authorities. The findings from this enquiry will equip policy makers and regulators, particularly the Auditor General’s office, when making subcontracting decisions, helping them to decide whether to incline with the global trend of mandatory auditor rotation or adapt an alternative perspective.