H1: The audit quality, measured in discretionary accruals, has been affected positively by the adoption of IFRS.
As discussed in paragraph 3.5.2, the variable EBIT (Earnings Before Interest and Taxes) has also been subjected to researches where findings were documented stating that EBIT has an influence on discretionary accruals. Therefore, in addition to the main research question, the following sub research question can be stated:
Sub research question 1: Is the level of EBIT affecting audit quality for stock listed Australian companies after the adoption of IFRS?
Therefore, the second hypothesis is stated as:
H2: A higher EBIT, compared to the year before, is associated to an increase of discretionary accruals in the years prior to the adoption of the IFRS compared to the period after the adoption IFRS?
Also discussed in paragraph 4.5.2, the variable ROA (Return on Assets) has also been subjected to researches where findings were documented stating that ROA has an influence on discretionary accruals. Therefore, in addition to the main research question, the following sub research question can be stated
Sub research question 2: Is the level of ROA affecting audit quality for stock listed Australian companies after the adoption of IFRS?
In order to determine if ROA is outperforming the adoption of IFRS in terms of predicting audit quality, the second hypothesis is stated as:
H3: A higher ROA has a higher impact on audit quality in the years prior to the adoption of the IFRS compared to the period during the IFRS.
After gathering all the information regarding Australian companies, the comparison with other regions can be made in terms of the effect of the adoption of IFRS on audit quality. Therefore, the final research question can be described as:
Sub research question 3: Is the effect on audit quality, due to the adoption of IFRS regarding Australian stock listed companies, similar compared to companies in other regions?