The purpose of this paper is to explore the relationship between audit service quality, client satisfaction and loyalty to the audit firms. SERVQUAL model was used to measure the perceptions and expectations of public listed companies on the services received from audit firms.
The five dimensions of SERVQUAL, i.e. reliability, assurance, tangibility, empathy and responsiveness was used to measure the service quality of audit firms. The research was conducted using primary data. Questionnaires were sent to 500 public listed companies listed in Bursa Saham Malaysia for year 2005.
The public listed companies were satisfied with the tangible dimension but were dissatisfied with the other four dimensions. The most dissatisfied dimension was empathy. Customer satisfaction was found to partially mediate the relationship of reliability and customer loyalty.
The small sample size is a limitation of the study. Also, the study examined all services offered by audit firms. A larger sample size and focusing on a particular service would be better as the respondents would then be able to give a more focused answer. Also, the public listed companies were not analysed further into various industry types, size of firm and other corporate attributes to understand their different needs.
The study defines the attributes of quality services from the clients' perspective. Once the needs are more clearly known and understood, the audit firms will be in a better position to anticipate clients' requirement rather than to react to clients' dissatisfactions.
The paper uses a marketing model, SERVQUAL, to measure the service quality of audit firms.
