This study represents a pioneering investigation into the relationship between social and Islamic (religious) capital and the audit expectation gap among companies listed on the Tehran Stock Exchange. Specifically, this study aims to determine whether social and Islamic capital influence the audit expectation gap.
To achieve this, this study uses multivariate regression analysis to test the hypotheses. The analysis is based on data from 170 companies listed on the Tehran Stock Exchange, spanning 2012–2021. The multiple regression model assesses the relationship between social and Islamic capital and the audit expectation gap.
The results reveal a significant negative relationship between social and Islamic capital and the audit expectation gap. Through its various dimensions, relational, structural and cognitive-social capital facilitates the forming stakeholder relationships and interactions. This, in turn, fosters a shared understanding between auditors and users of financial statements. Furthermore, Islamic capital enhances communication and mutual understanding through shared religious beliefs and emphasizes moral virtues, leading auditors to perform their duties with greater integrity and professionalism.
This research contributes to the existing literature by addressing a gap in the field and providing valuable insights for managers, analysts, experts and users of financial statements. It offers practical implications by highlighting the influence of nonfinancial variables, such as social and Islamic capital, on the audit expectation gap, thereby offering guidance for improving audit practices and fostering better communication between auditors and stakeholders.
