Audit service quality, client satisfaction and client loyalty : evidence from Malta

Abstract

Purpose: The objective of this study is to investigate factors influencing the determinants of client loyalty in Malta. It aims at assessing the significance of the gap between the expectations and the perceptions of Maltese audit clients with regards to the quality of audit service. It also assesses the significance of the relationships between audit service quality, client satisfaction and client loyalty. Finally it examines whether client satisfaction mediates the relationship between audit service quality and client loyalty. Design: Online questionnaires were sent to 384 registered companies in Malta. The data collected was used to measure audit service quality using the SERVQUAL model and to build a multiple regression model. The model was further complemented with a focus group which was conducted amongst seven local audit clients. Findings: The study's results show that assurance is the most important SERVQUAL dimension, for expectations. The study also provides evidence that clients are dissatisfied with all the dimensions, except for tangibles. The most dissatisfied dimension was reliability. Findings also reveal that there is a significant positive direct effect between audit service quality, client satisfaction and client loyalty. Furthermore the results indicate that the relationship between client satisfaction and client loyalty is stronger than the service quality-client satisfaction relationship. This study also reports that client satisfaction mediates the relationship between audit service quality and client loyalty. Conclusions: The study arrives at a conclusion that to enhance behavioural intentions, movement along audit service quality, client satisfaction and client loyalty is necessary in today's highly competitive environment. Implication: This study sought to define service quality from the perspective of the clients. Audit firms would be able to benefit from this study as by focusing on the factors leading to client loyalty it will help them to maintain long-term relationships with their clients.