The potential conflict of interests among owners, managers and other security holders create an environment in which an external auditor may contribute significant value to investors. The recent collapse of Enron and the irregularities found in its accounting statements have brought increased scrutiny of the role that auditors play in financial markets. In fact, recent researches examine whether audit membership in the Big 4, industry specialization and audit firm tenure can be differentiated by the quality of audits. We extend these researches by examining how auditor Big 4, industry specialization and audit firm tenure are associated with bid-ask spread, a widely accepted measure of liquidity. The question that motivates our research is whether and how the auditor size, specialization and tenure are associated with the market's perception of audit quality.

The aim of this study is to investigate the role of the auditor in Tunisian Stock Exchange. Indeed, this financial place witnessed several reforms from 1989, followed by the institution of other mechanisms of regulation and control and the application of the New Accounting System of Companies from the beginning of 1997, then in 2005 when a new law of Financial Security came into force after the affair of the company BATAM in 2002 and 2003 which caused a decrease of portfolio value for small investors, not being protected during this period. This law has reinforced the role and the responsibility of the auditor.

Audit Practice Journal, Audit Quality, Equity Liquidity, Capital Market, Financial Statements, Risk-Return Strategies, ERC, Market Capitalization, Financial Market Board, Audit Firm Tenure, Tunisia Stock Exchange, Emerging Market, Information Asymmetry, Business Operations.