This study aims to explore whether external and internal mechanisms affect firm performance by examining the impact of audit quality and board independence on firm performance as well as the impact of audit quality on the relationship between board independence and firm performance. The results show that audit quality is positively associated with firm performance and also has a positive impact on the relationship between board independence and firm performance. Specifically, we find that board independence is positively associated with firm performance only for firms audited by Big Four. Such a result implies that stronger outside monitoring can facilitate the behavior of independent directors in implementing their task. We thus suggest that companies can improve their performance by employing reputed auditors.
