The Use of Statistical Sampling in Auditing Business Contracts for Legal and Regulatory Compliance

Abstract

Purpose: This study examines the influence of Statistical Sampling Practices on Legal and Regulatory Compliance in multinational corporations and evaluates whether Audit Environment Quality moderates this relationship. The study investigates how sampling design, sample selection procedures, sample testing quality, and sampling analysis and evaluation contribute to stronger contractual governance and regulatory compliance.

Methodology: The study employs a balanced longitudinal panel dataset comprising 779 firm-year observations from 41 Fortune Global 500 corporations covering the period 2007 to 2025. Secondary data were compiled from audited corporate reports, governance disclosures, Public Company Accounting Oversight Board inspection reports, and internationally recognized institutional databases. The empirical analysis applies composite index construction, panel unit root tests, diagnostic and specification tests, construct validation, fixed effects panel regression, moderated regression analysis, and robustness assessments to establish reliable causal relationships.

Results/Analysis: The findings demonstrate that Statistical Sampling Practices exert a significant positive effect on Legal and Regulatory Compliance, with an aggregate regression coefficient of 0.982, indicating that stronger sampling capability substantially improves compliance performance. The relationship operates through enhanced evidence representativeness, improved error detection, stronger documentation quality, and more reliable statistical inference. Robustness diagnostics confirm measurement validity and model stability. Although Audit Environment Quality positively conditions the relationship, its moderating effect remains theoretically meaningful but statistically weak within the available empirical evidence.

Originality/Value: The study advances Agency Theory, Contingency Theory, and Institutional Theory by conceptualizing Statistical Sampling Practices as an integrated evidence-generation capability that strengthens governance quality and regulatory assurance. It provides internationally relevant evidence that rigorous statistical sampling enhances compliance effectiveness and offers practical guidance for regulators, audit committees, compliance officers, and multinational corporations seeking to strengthen legal compliance through evidence-based audit systems.

Type of paper: Empirical Research paper.