dp0609 - FEP - Universidade do Porto

(p-value=0.34), at the same time that the remaining results from the model are
virtually unchanged. We may therefore conclude that in the Portuguese case
our evidence suggests that the existence of an executive committee (EC) is a
good proxy for board diligence, but the same does not seem to apply to the
number of board meetings (MEET).
Board independence (proxied by our variables PNEXEC and DUAL) is
also a significant influence on the type of audit opinion issued, with the
expected negative and significant sign being found only for the proportion of
non-executive members (p-value0.10). Additional tests using sales or market capitalization as
alternative proxies for firm size yielded very similar results.
Our results show that the existence of consecutive losses (LOSS) has
the expected positive impact on the likelihood of a modified audit opinion. Also
in accordance with expectations, a larger equity ratio (ER) has a negative
influence on the probability that the auditor issues a modified opinion. The
same applies as well to asset profitability (ROA), our measure of firm
performance. All of these variables are therefore signed as expected and
statistically significant (p-value