The relationship between audit components and audit market adaptability

2020 ◽  
Vol 27 (3) ◽  
pp. 835-853
Author(s):  
Mahdi Salehi ◽  
Mahdi Saravani ◽  
Safoura Rouhi
Keyword(s):  
Significant Relationship ◽  
Stock Exchange ◽  
Audit Fees ◽  
Policy Makers ◽  
Statistical Population ◽  
Content Type ◽  
Listed Firms ◽  
Audit Market ◽  
Audit Firms ◽  
The Relationship

Purpose This study aims to study the relationship between audit components and collusion in the audit market. Design/methodology/approach The statistical population of the study includes 130 listed firms on the Tehran Stock Exchange from 2012-2017. The data tested using multivariate regression. Findings The findings of the study indicate that there is a positive and significant relationship between Rank A audit firms, competition and audit fees and audit market adaptability. The relationship standard fees and audit market adaptability, however, is negative and significant. Moreover, the results of the study show that there is no significant relationship between opinion shopping, type of audit report, audit market concentration, and agency costs with audit market adaptability. Originality/value The current study fills the gap in this area, and the results of the study may give direction to researchers and policy makers.

The effect of auditor narcissism on audit market competition

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Hojat Mohammadi ◽  
Mahdi Salehi ◽  
Meysam Arabzadeh ◽  
Hassan Ghodrati
Keyword(s):  
Financial Markets ◽  
Significant Relationship ◽  
Design Methodology ◽  
Audit Quality ◽  
Stock Exchange ◽  
Market Competition ◽  
Competitive Pressure ◽  
Content Type ◽  
Listed Firms ◽  
Audit Market

Purpose This paper aims to assess auditor narcissism’s effect on audit market competition (auditor concentration, clients’ concentration and competitive pressure). Design/methodology/approach This paper’s method is descriptive-correlational based on published information from listed firms on the Tehran Stock Exchange from 2012 to 2018 using a sample of 188 firms (1,310 observations). The method used for hypothesis testing is linear regression using panel data. Findings The results show a negative and significant relationship between auditor narcissism and audit market competition and its indices, including auditor concentration, clients’ concentration and competitive pressure. Moreover, a positive and significant relationship was observed between audit quality and audit market competition and its indices, including auditor concentration, client concentration and competitive pressure. Originality/value To analyzes competition indices in the audit market (auditor concentration, clients’ concentration and competitive pressure). The variable is assessed once more using the exploratory factor analysis of the so-called three variables single variable, named audit market competition. So the central question of the study is investigated within a broader sense. Moreover, as the present study is carried out in the emergent financial markets with extremely competitive audit markets to figure out the effect of auditors’ intrinsic characteristics on such markets’ competitiveness, it can provide useful information in this field.

The relationship between audit components and audit expectation gap in listed companies on the Tehran stock exchange

2019 ◽  
Vol 18 (1) ◽  
pp. 199-222 ◽  
Author(s):  
Mahdi Salehi ◽  
Fariba Jahanbin ◽  
Mohammad Sadegh Adibian
Keyword(s):  
Regression Model ◽  
Multiple Regression ◽  
Stock Exchange ◽  
Audit Fees ◽  
Listed Companies ◽  
Multiple Regression Model ◽  
Content Type ◽  
Expectation Gap ◽  
Audit Firms ◽  
The Relationship

Purpose The expectation gap between auditors and users has recently been the topic of many controversies. This paper aims to evaluate the relationship between auditor’s characteristics and audit expectation gap among information users in listed companies on the Tehran stock exchange market. In other words, the study attempts to find whether there is a significant relationship between audit components and the audit expectation gap or not. Design/methodology/approach The multiple regression model is used to test the hypotheses. Research hypotheses are tested using a sample of 78 listed companies on the Tehran stock exchange during 2012-2016, by using integrated data technique of the multiple regression model. Findings The findings show that standard audit fees are not significantly associated with the audit expectation gap. Furthermore, audit fees are negatively associated with the audit expectation gap, which provides that allocated audit price in financial statements gives useful information for external and internal individuals. Predictably, it is recommended that audit opinion significantly determines the level of the audit expectation gap. The authors also find that the independence of the director boards and audit committee members fulfill the expectation gap of individual users. Moreover, finding the negative impact of audit firms ranking on the expectation gap, supports the idea of higher ranked audit firms provide high quality services, and consequently, more reliable information. Finally, the results show that the audit record is positively associated with the audit expectation gap. Originality/value As all recent studies on the expectation gap were qualitative, the present study is the first paper, which measures the expectation gap quantitatively through the statistical method.

Auditors’ response to readability of financial statement notes

2020 ◽  
Vol 28 (3) ◽  
pp. 463-480
Author(s):  
Mahdi Salehi ◽  
Mahmoud Lari Dasht Bayaz ◽  
Shaban Mohammadi ◽  
Mohammad Seddigh Adibian ◽  
Seyed Hamed Fahimifard
Keyword(s):  
Stock Exchange ◽  
Financial Statements ◽  
Audit Fees ◽  
Financial Statement ◽  
Audit Report ◽  
Financial Reports ◽  
Statistical Population ◽  
Content Type ◽  
Listed Firms ◽  
Going Concern Opinion

PurposeThe main objective of the present study is to assess the potential impact of readability of financial statement notes on the auditor's report lag, audit fees and going concern opinion (GCO).Design/methodology/approachThe statistical population of this study includes all listed firms on the Tehran Stock Exchange (TSE) for the period of 2012–2017. The systematic elimination method is used for sampling and multiple regression and EViews software are used for testing the hypothesis models.FindingsThe obtained results show that there is a significant and positive relationship between audit report lags and readability of financial statements. Moreover, it is also revealed that readability of financial statements is positively associated with audit fees. Furthermore, the findings suggest a negative correlation between readability indexes and issuing GCOs, denoting hard-to-read statements is considered as a risk factor by auditors. Finally, the observations of our robustness tests suggest that the association between audit report lag and readability of financial statements is robust.Originality/valueThis is the first conducted investigation concerning auditor's response to the readability of financial statement notes in TSE. The outcome of current paper may pave the way for revising and developing Iranian accounting standards in order to give a fairer and clearer picture of financial reports.

The relationship between managerial ability, earnings management and internal control quality on audit fees in Iran

2019 ◽  
Vol 69 (4) ◽  
pp. 685-703 ◽  
Author(s):  
Mahdi Salehi ◽  
Mahmoud Mousavi Shiri ◽  
Seyedeh Zahra Hossini
Keyword(s):  
Earnings Management ◽  
Internal Control ◽  
Significant Relationship ◽  
Stock Exchange ◽  
Audit Fees ◽  
Real Earnings Management ◽  
Managerial Ability ◽  
Content Type ◽  
Control Quality ◽  
The Relationship

Purpose The purpose of this paper is to emphasize the relationship between managerial ability, earnings management, internal control quality and audit fees to establish whether or not there is a significant relationship between the variables of managerial ability, earnings management, internal control quality and the audit fees. Design/methodology/approach The study sample includes 190 listed companies on the Tehran Stock Exchange during 2009–2016. Research hypotheses were tested using the statistical methods of multivariable linear regression and data envelopment analysis pattern. Findings The obtained results indicate that there is a significant and direct relationship between managerial ability and internal control quality as well as real earnings management and internal control quality. Based on the results obtained from the second hypothesis, the authors could claim that there is an inverse and significant relationship managerial ability and audit fees. The third hypothesis also revealed that in companies with lower audit fees, there is a stronger relationship between managerial ability and internal control quality. The results of related tests show no significant relationship between accrual-based earnings management and internal control quality. Originality/value This paper is the first study in Iran whose main focus is on the relationship between managerial ability, earnings management, internal control quality and audit fees.

The relationship between auditor characteristics and fraud detection

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Jalil Khaksar ◽  
Mahdi Salehi ◽  
Mahmoud Lari DashtBayaz
Keyword(s):  
Multiple Regression ◽  
Significant Relationship ◽  
Stock Exchange ◽  
Fraud Detection ◽  
Financial Statements ◽  
Audit Fees ◽  
Multiple Regression Model ◽  
Content Type ◽  
The Relationship ◽  
Auditor Characteristics

Purpose This paper aims to analyze the relationship between the following auditor's characteristics with detecting frauds in the listed companies on the Tehran Stock Exchange. Design/methodology/approach A multiple regression model is used to test the research hypothesis. The hypothesis was further tested with a sample of 187 companies listed on the Tehran Stock Exchange (1,309 observations) from 2012 to 2018 and by using multiple regression models based on panel data and the random-effects model. Findings The results suggest a positive and significant relationship between audit firms' size, auditor rotation, specialization in the industry, the audit market's focus, auditor's independence, audit report lag and renewal of financial statements with fraud detection. The results revealed a significant relationship between the period of auditor tenure, auditor's narcissism, audit fees and the type of auditors' opinion (un-qualified opinion) with fraud detection. Originality/value As the present study is a pioneer in examining this issue in the emerging markets, it provides users, analysts and legal entities with useful information about auditor characteristics that significantly affect the fraud detection of financial statements. The results mitigate the literature gap and improve knowledge in this area.

scholarly journals The relationship between cash holdings, investment opportunities and financial constraint with audit fees

2018 ◽  
Vol 3 (1) ◽  
pp. 15-27 ◽  
Author(s):  
Mohammad Mohammadi ◽  
Behzad Kardan ◽  
Mahdi Salehi
Keyword(s):  
Significant Relationship ◽  
Stock Exchange ◽  
Cash Holdings ◽  
Audit Fees ◽  
Financial Constraint ◽  
Manufacturing Companies ◽  
Content Type ◽  
Data Regression ◽  
Investment Opportunities ◽  
The Relationship

Purpose The purpose of this paper is to investigate the relationship between cash holdings, investment opportunities and financial constraint with audit fees in Iran. Design/methodology/approach In order to collect data, all manufacturing companies listed on the Tehran Stock Exchange are used to test the hypotheses during 2008–2015. Panel data and combined data regression model were used for data analysis. Tests were performed using R statistical software. Findings The results obtained from the statistical analysis of research hypotheses indicated that there is a significant relationship between cash holdings and audit fees. Furthermore, the relationship between cash holdings, financial constraints and audit fees was significant. In addition, there was no significant relationship between cash holdings, investment opportunities and audit fees. Originality/value The current study employed a unique topic in terms of a developing country, and the results may give strength to other developing nations.

Comparative analysis of the relationship between internal control weakness and different types of auditor opinions in fraudulent and non-fraudulent firms

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mahmoud Lari Dashtbayaz ◽  
Mahdi Salehi ◽  
Mahdi Hedayatzadeh
Keyword(s):  
Internal Control ◽  
Stock Exchange ◽  
Internal Controls ◽  
Statistical Population ◽  
Content Type ◽  
Listed Firms ◽  
Logit Regression ◽  
Different Types ◽  
Logit Regression Model ◽  
The Relationship

Purpose This study aims to assess the relationship between internal control weakness and different types of auditor opinions in fraudulent and non-fraudulent firms. The study's main objective is to investigate fraud in business firms and analyze internal controls and types of proposed opinions by the auditor about his desired firm. The outbreak of fraud in firms is of utmost importance to a broad spectrum of society. Internal controls and the auditor's role in preventing and detecting frauds should not be taken for granted. Design/methodology/approach The present study's statistical population includes 179 listed firms on the Stock Exchange selected as the study sample using the systematic elimination method during 2012–2019. As the study's dependent variable (the type of auditor’s opinion), research hypotheses were analyzed using the Logit regression model. Findings The results show that the relationship between internal control weakness and opinion type is significantly different in fraudulent and non-fraudulent firms. Moreover, the relationship between internal control weakness and type of auditor opinion in fraudulent firms and the relationship between internal control weakness and type of auditor opinion in non-fraudulent firms are significant. Originality/value By assessing the related literature, the authors have found no study to directly assess the comparative relationship between internal control weakness and the type of auditor opinion, which can be named as the main objective of the study.

The relationship between different types of leadership, client's identity, and self-confidence and auditors' impartiality

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mahdi Salehi ◽  
Alireza Ghaderi ◽  
Habibe Hashemisima ◽  
Zohreh Zahedi
Keyword(s):  
Transformational Leadership ◽  
Significant Relationship ◽  
Model Fitting ◽  
Structural Equations ◽  
Statistical Population ◽  
Content Type ◽  
Self Confidence ◽  
Audit Firms ◽  
Descriptive Survey ◽  
The Relationship

PurposeThis paper aims to assess the effect of different leadership types, the client's identity and auditors' self-confidence on auditors' impartiality.Design/methodology/approachThis paper is a descriptive-survey type, and the collected data are based on a predesigned questionnaire distributed in January 2020. The PLS software is used for data analysis, and the statistical population of this paper includes employed auditors in enlisted audit firms on the Official Association of Auditors. When the parameters were insignificant, the obtained probability from the model fitting was used for hypothesis testing, and the appropriateness of the model was assessed via the structural equations.FindingsThe results show a significant relationship between charismatic, transformational, participatory, delegating and bureaucratic leadership and auditors' impartiality. There is also an association between the client's identity and the auditor's impartiality. The client's identity mediates the relationship between transformational leadership and the auditor's impartiality. Moreover, there is a significant relationship between self-confidence and auditor's impartiality.Originality/valueThis paper enjoys an innovative method in the field of behavioural auditing. The effect of transformational leadership on auditor's impartiality with the mediatory role of the client's identity shows the in-depth client–auditor relationship has been taken for granted and not examined previously, so the results of this paper can lend a helping hand to audit firms to enhance the organisational performance.

The consequences of the auditor’s choice in group companies and expectations gap

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mahdi Salehi ◽  
Arash Arianpoor
Keyword(s):  
Financial Reporting ◽  
Significant Relationship ◽  
Stock Exchange ◽  
Business Groups ◽  
Reporting Quality ◽  
Audit Fees ◽  
Content Type ◽  
Listed Firms ◽  
Expectations Gap ◽  
Expectation Gap

Purpose The purpose of this paper is to investigate the consequences of the auditor’s choice in group companies and the expectation gap of listed firms on the Tehran Stock Exchange (TSE). Design/methodology/approach In this study, 128 companies (768 observations) listed on the TSE during the period 2012 to 2017 have been investigated. To test the hypotheses, logistic regression has been used. Findings The results showed that companies that are members of business groups are more likely to choose their auditors from large audit firms. The research findings also showed no significant relationship between the business group firms that have used the large auditor and the financial reporting quality. The results showed a positive and meaningful relationship between the member firms that use the large auditor and the audit fees. The results showed a negative and significant relationship between membership in business groups and the audit expectations gap. Originality/value Despite the importance of the audit performance, defining auditors’ roles most acceptably has always been challenging to create a gap through the diverse understanding of auditors’ role, which is the distance of perception between users’ auditors. For this reason, over the past years, the audit expectation gap and how to reduce it have focused on academics, professional accounting firms and users of financial statements. As any unmet expectations from the community will reduce the audit firm’s credibility and ability to gain and be widely detrimental to stakeholders, the audit study’s expectation gap in performing audit study is critical. Although there are extensive studies on the gap in auditing expectations in developed economies, most conclusions cannot be attributed to developing countries such as Iran due to cultural and legal differences. Besides, the audit environment in Iran and existing laws can have different results. This research also helps to bridge this gap by providing additional guidance to regulators. Besides, as all recent studies on the expectation gap were qualitative, the present study measures the expectation gap through quantitative statistical methods.

The relationship between managerial entrenchment, social responsibility, and firm’s risk-taking and shareholders’ activity

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mahdi Salehi ◽  
Hussein Alkhyyoon
Keyword(s):  
Social Responsibility ◽  
Hypothesis Testing ◽  
Risk Taking ◽  
Significant Relationship ◽  
Stock Exchange ◽  
Firm Risk ◽  
Content Type ◽  
Listed Firms ◽  
Managerial Entrenchment ◽  
The Relationship

Purpose This study aims to assess the relationship between managerial entrenchment, social responsibility and risk-taking of the firm and shareholders’ activity. Design/methodology/approach The study is carried out based on the disclosed information of listed firms on Tehran and Iraq Stock Exchanges during 2011–2017 from a sample of 121 firms on the Iranian side and 37 firms on the Iraqi side. The hypothesis testing is performed using panel estimators of the adjusted regression models. Findings The obtained results from hypothesis testing show that there is a significant relationship between managerial entrenchment, social responsibility disclosure, social responsibility growth of the firm and risk-taking and shareholders’ activity in the Iranian Stock Exchange firms. Moreover, in the case of Iraqi firms, a significant relationship is observed between managerial entrenchment, social responsibility disclosure, social responsibility growth of the firm but the relationship between firm risk-taking and shareholders’ activity was not evident. Originality/value The current study is almost is the first study conducted on two Islamic countries and the outcomes of the study may help other Muslim countries on the subject of the study.

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