Empirical evidence of audit opinion shopping in Iran

Purpose The aim of this study is to develop a comprehensive index for evaluating the audit opinion shopping. To achieve this, various criteria have been taken into account to create an index that effectively assesses the extent of this practice. Ultimately, the study aims to provide a practical tool for a more precise analysis and evaluation of audit opinion shopping. Design/methodology/approach The composite index was developed using a linear composite method, with weights determined through Multiple-Criteria Decision-Making (MCDM) employing the Analytic Hierarchy Process (AHP) based on pairwise comparisons. Data from companies listed on the Tehran Stock Exchange (2017–2022) were collected to measure the index. Findings The composite index provides a more nuanced reflection of audit opinion shopping due to its multidimensional approach. Among the criteria, abnormal audit fees exhibited the highest coefficient, indicating their significant role in motivating managers to seek unqualified audit opinions. In contrast, changing the audit partner had the lowest coefficient, reflecting its cost-effective and less transparent nature as a strategy for achieving unqualified audit opinions. Research limitations/implications The reliability of the proposed index could be enhanced with additional applications and retests. Moreover, as with all expert-based methods, the coefficients of the criteria might vary with changes in the expert panel. Practical implications Implementing this composite index can help stakeholders verify the authenticity of financial statement reliability as audited. It also enables awareness of the broader economic, social, and political consequences of audit opinion shopping. Social implications The study addresses audit quality's social and economic impact by providing a tool for stakeholders to identify and mitigate opportunistic behaviors in audit practices, fostering greater transparency and accountability. Originality/value This study contributes to the audit literature by exploring audit opinion shopping in emerging markets, such as Iran, where institutional and auditing practices differ significantly from developed economies. It provides a basis for regulatory bodies to design policies related to audit contracts and competition. Furthermore, the index offers insights to investors, companies, and researchers for evaluating audit quality, supporting decision-making, and conducting further research in this area.