Zakat, expertise of audit committee chair and audit quality

Purpose Religious ethics, namely, zakat, could influence organizational ethics, particularly accounting and auditing processes and decision-making. Therefore, this study aims to examine the effect of zakat and the financial and nonfinancial expertise of the audit committee (AC) chair on audit quality. Design/methodology/approach A panel data set of 302 companies listed on the Pakistan Stock Exchange is used to analyze the effect of zakat and the AC chair’s expertise on audit quality, supporting agency theory. Findings A firm’s propensity to pay zakat is more likely to improve audit quality and discourage rent-seeking. Zakat improves audit quality and mitigates fraud by reinforcing organizational ethics. Zakat also supports AC chairs’ financial and nonfinancial expertise in improving audit quality. However, the financial expertise of the AC chair has a more significant impact on audit quality. In that context, this research offers novel evidence for policymakers’ and management practitioners’ interest in organizational ethics. Also, it helps shareholders and investors understand the management’s intentions. Originality/value This paper investigates the impact of zakat, a religious ethics, on auditing from an organizational ethics perspective and presents evidence of zakat’s impact on audit quality.