the effect of audit qualifications on share prices and on analyses of annual financial statements by stock – brokers of tehran stock exchange

the results of examination of annual financial statements by independent experts (auditors) are presented in reports. we have tried to examine and evaluate the activities of two important professions of accountancy and auditing in iran, in preparing and validating annual financial statements, and relate these evaluations to group behavior of share – holders and analyses of stock – brokers. for these purposes, all audit reports on financial on statements of all companies listed of tehran stock exchange whose financial year ended on or during 1374 were studied, and 37 companies satisfied one of the four criteria of choice. to examine the effect of audit qualifications on share prices, 10 out of 37 companies chosen above which had the largest qualification were compared with 10 comparable companies as control group with no qualifications. to examine individual behavior of stock – brokers, a questionnaire which was supplemented by interview and document analysis was distributed to all brokers (43 individual and legal entities), for all 37 companies selected above. analyses showed that there was a relationship between share prices and audit qualifications, but resposes by brokers showed that they did not include audit qualifications in their evaluation of accounting information.