Audit tenure, auditor specialization and audit report lag

2014 ◽  
Vol 29 (6) ◽  
pp. 490-512 ◽  
Author(s):  
Mai Dao ◽  
Trung Pham
Keyword(s):  
National Level ◽  
Positive Association ◽  
Early Years ◽  
Audit Report ◽  
Industry Specialization ◽  
Content Type ◽  
Audit Firm ◽  
Differentiation Strategy ◽  
Auditor Industry Specialization ◽  
The Impact

Purpose – This paper aims to examine the association between audit firm tenure and audit report lag (ARL) and the impact of auditor industry specialization on the association between audit firm tenure and ARL. Design/Methodology/Approach – Using Habib and Bhuiyan’s (2011) method of measuring auditor industry specialization, the authors examine the sample of 7,291 firm-year observations from 2008 to 2010. Findings – The authors find that auditor industry specialization (regardless of city-level, national-level and joint city- and national-level industry specialization) weakens the positive association between ARL and short audit firm tenure, suggesting that auditor industry specialization complements the negative effect of short audit firm tenure on ARL. Originality/value – First, the authors add to the literature by answering the question of whether hiring industry auditor specialists is an effective way to shorten ARL created by short audit tenure. The authors provide some evidence that the concern of short audit tenure leading to longer ARL is reduced by hiring an industry-specialized auditor. Prior research mainly focuses on identifying the determinants of ARL without going further to find out which are the effective ways to reduce the audit delay. Second, their findings can somehow resolve the debate on whether audit firm rotation should be mandatory. A new auditor’s lack of knowledge of clients’ business operations during the early years of audit engagements results in longer ARL, which eventually influences the clients’ financial performance. The authors' result suggests the firms can reduce this adverse consequence by hiring an industry-specialized auditor. Finally, their findings may provide helpful information to firms in selecting external auditors, public accounting firms in selecting a differentiation strategy and regulators in mandating audit firm rotation.

The associations between audit firm attributes and audit quality-specific indicators

2019 ◽  
Vol 34 (1) ◽  
pp. 6-43 ◽  
Author(s):  
Bahaaeddin Ahmed Alareeni
Keyword(s):  
Legal System ◽  
Audit Quality ◽  
Meta Analysis ◽  
Firm Reputation ◽  
Industry Specialization ◽  
Content Type ◽  
Audit Firm ◽  
Auditor Industry Specialization ◽  
Analysis Technique ◽  
Firm Attributes

PurposeThis study aims to investigate the associations between audit firm attributes (i.e. audit firm size, non-audit services, auditor industry specialization and auditor-client tenure) and specific indicators of audit quality. It also aims to test whether these relationships are moderated by a set of other factors like legal system and US versus non-US settings.Design/methodology/approachThe method of Hunter et al. (1982) is used as a meta-analysis technique to test the study hypotheses and achieve the study aims. A total of 71 published papers from 1992 to 2017 are included.FindingsThere are significant positive relationships between all audit firm attributes and audit quality. Additionally, the associations between all audit firm attributes and audit quality are moderated by proxies for audit quality. Furthermore, these associations are moderated by other variables, such as US and non-US studies, pre-SOX and post-SOX periods, the legal system, the strength of auditing and reporting standards and country classification (developed or developing country).Research limitations/implicationsThe number of studies is insufficient for some variables, and therefore, the results should be interpreted with caution. In addition, the analyzed studies include several proxies, and thus, the number of studies is inadequate for the incorporation of other factors in the meta-analysis (e.g. audit firm experience and audit firm reputation).Originality/valueThis study contributes to audit quality research by providing empirical evidence of the associations between a specific set of audit firm attributes and audit quality using the meta-analysis method. More importantly, the study provides evidence on factors that moderate these associations.

scholarly journals Audit Firm Industry Specialization as a Differentiation Strategy: Evidence from Fees Charged to Firms Going Public

2003 ◽  
Vol 22 (2) ◽  
pp. 33-52 ◽  
Author(s):  
Brian W. Mayhew ◽  
Michael S. Wilkins
Keyword(s):  
Market Share ◽  
Cost Savings ◽  
Audit Fees ◽  
Industry Specialization ◽  
Audit Firm ◽  
Differentiation Strategy ◽  
Market Shares ◽  
Audit Firms ◽  
Bargaining Position ◽  
The Impact

This paper examines IPO audit fees to assess the use of industry specialization as a differentiation strategy by audit firms. We extend existing theory on the impact of industry specialization on audit fees by incorporating Porter's (1985) theory of competition and differentiation. We suggest that market share enables audit firms to gain competitive advantages in terms of cost and service. However, the impact of such advantages on fees depends on whether the audit firm has successfully differentiated itself from competitors within client industries. Our results indicate that as audit firm industry market share increases without a differentiation in market share, the audit fee charged for a given IPO decreases. In the context of Porter (1985), this result suggests that the client is able to bargain for a portion of the auditor's cost savings because the audit firm has not successfully differentiated itself from competitors. In contrast, we show that audit firms that possess significantly higher market shares than their industry competitors earn fee premiums, suggesting that audit firms that have successfully differentiated themselves retain a stronger bargaining position with their clients.

Clients' Expectations on Audit Judgments: A Note

2004 ◽  
Vol 16 (1) ◽  
pp. 63-74 ◽  
Author(s):  
Venkataraman M. Iyer ◽  
Dasaratha V. Rama
Keyword(s):  
Audit Quality ◽  
Financial Statements ◽  
Early Years ◽  
Relative Power ◽  
Client Perceptions ◽  
Audit Firm ◽  
Auditor Tenure ◽  
Start Up ◽  
Nonaudit Services ◽  
The Impact

Audited financial statements can be viewed as the product of negotiations between a company's management and its auditor. Relative power of these two parties is a major factor that determines the outcome of the negotiation. This study examines the impact of auditor tenure, importance of a client to an audit partner, nonaudit purchases, and prior audit firm experience of client personnel on client perceptions about their ability to persuade the auditor in the context of an accounting disagreement. We obtained responses to a survey from 124 CPAs in industry who are employed as CEOs, CFOs, controllers, or treasurers. Our results indicate that respondents from companies with short auditor tenures were somewhat more likely to indicate that they could persuade the auditor to accept their (client's) position in case of a disagreement. This finding is consistent with the argument that auditors are susceptible to influence in the early years as they are still in the process of recouping start-up costs, but is not consistent with concerns expressed by legislators and others that long auditor tenures will adversely affect audit quality. Respondents who believed their business was more important for the audit partner were also more likely to believe that they could persuade the auditor. However, the purchase of nonaudit services and prior audit experience were not related to client's perceptions about their ability to persuade the auditor.

Social capital and national innovation system: a cross-country analysis

2014 ◽  
Vol 21 (4) ◽  
pp. 453-475 ◽  
Author(s):  
Sepehr Ghazinoory ◽  
Ali Bitaab ◽  
Ardeshir Lohrasbi
Keyword(s):  
Social Capital ◽  
National Level ◽  
Innovation System ◽  
Negative Effects ◽  
Content Type ◽  
Research Findings ◽  
Different Dimensions ◽  
The Impact ◽  
Positive Effect

Purpose – In the last two decades, researchers have paid much attention to the role of cultural values on economic and social development. In particular, the crucial role of different aspects of culture on the development of innovation has been stressed in the literature. Consequently, it is vital to understand how social capital, as a core cultural value, affects the innovation process and the innovative performance at the national level. However, to date, the impact of different dimensions of social capital and innovation has not been properly portrayed or explained. Thus, the purpose of this paper is to investigate the influence of four different dimensions of social capital (institutional and interpersonal, associational life and norms) on two of the main functions of national innovation system (NIS) (entrepreneurship and knowledge creation) based on over 50,000 observations in 34 countries. Design/methodology/approach – In this regard, national-level data from the World Values Survey database was employed to quantify social capital. Entrepreneurship is, in turn, assumed to consist of three sub-indexes and 14 indicators based on the Global Entrepreneurship Index. Knowledge creation is also measured through US Patent Office applications. Also, exploratory factor analysis and structural equation modeling approach were used to build the measurement model and investigate the impact that each factor of social capital had on entrepreneurship and knowledge application, respectively. Measurement and structural models were built and their reliability and validity were tested using various fit indices. Research findings suggest the strong positive effect of institutional trust and networking on entrepreneurship. Also, interpersonal trust and networks were shown to have high influence on knowledge development at the national level. Norms appear to have naïve to medium negative effects on both functions. Findings – Research findings suggest the strong positive effect of institutional trust and networking on entrepreneurship. Also, interpersonal trust and networks were shown to have high influence on knowledge development at the national level. Norms appear to have naïve to medium negative effects on both functions. Originality/value – However, to date, the impact of different dimensions of social capital and innovation has not been properly portrayed or explained.

The impact of transformational leadership on employees’ acceptance to change

2018 ◽  
Vol 48 (4) ◽  
pp. 559-578 ◽  
Author(s):  
Ritu Tayal ◽  
Rajesh Kumar Upadhya ◽  
Mohit Yadav ◽  
Santosh Rangnekar ◽  
Reena Singh
Keyword(s):  
Transformational Leadership ◽  
Leadership Style ◽  
Positive Association ◽  
Mediating Effects ◽  
Content Type ◽  
Bank Managers ◽  
Innovative Behaviour ◽  
Service Oriented ◽  
Employee Acceptance ◽  
The Impact

Purpose The purpose of this study is to empirically examine the association between transformational leadership and employee acceptance to change while establishing the mediating effects of innovative behaviour and the moderating effect of the use of information technology (IT) on this association. Design/methodology/approach In total, 378 employees of ten banks from Uttarakhand, India, participated in a questionnaire-based survey. The proposed hypotheses and the proposed conceptual model were tested using macro process (Hayes, 2013). Findings The results indicated that there exists a positive association between transformational leadership and employee acceptance to change. Furthermore, it was found that this association was mediated by employee innovative behaviour and moderated by the use of IT. Practical implications The findings of this study will help managers to comprehend the significance of the innovative behaviour of employees in moulding their acceptance towards change. This paper should encourage bank managers to perceive the significance of the working practice and the infusion of IT. Furthermore, this study accentuates the significance of an effective leadership style, i.e. transformational leadership, as an essential phenomenon to positively impinge on employee acceptance to change in a service-oriented industry, namely banking. Originality/value The present study enriches the extant research on transformational leadership and employee acceptance to change by demonstrating the use of IT and innovative behaviour as vital and the important factors that influence the level of persuasion that transformational leadership has on employee acceptance to change.

Foreign subsidiaries’ competitive strategy: the impact of corporate support and local competition

2017 ◽  
Vol 29 (6) ◽  
pp. 606-627 ◽  
Author(s):  
Anders Pehrsson
Keyword(s):  
Product Differentiation ◽  
Competitive Strategy ◽  
Positive Association ◽  
International Strategy ◽  
Competitive Intensity ◽  
Content Type ◽  
Cost Leadership ◽  
The Usa ◽  
Corporate Support ◽  
The Impact

Purpose The study draws on the resource-based view and the contingency view of strategy. The purpose of this paper is to contribute to international strategy literature by extending the current understanding of foreign subsidiary’s competitive strategy in terms of cost leadership and product differentiation. Design/methodology/approach Hypotheses concern associations between corporate support building on product and skills relatedness and subsidiary strategies. Also, it is hypothesized that strategies are due to the type of local competitive intensity. The hypotheses were tested on wholly owned subsidiaries of Swedish industrial firms in Germany, the UK and the USA. Findings Product and skills relatedness between the subsidiary and the corporate core unit are positively associated with the subsidiary’s emphasis on cost leadership. Also, a positive association was found between skills relatedness and product differentiation, and extensive competitive intensity strengthens the relationship. Research limitations/implications The study specifies what business relatedness is needed for a subsidiary’s competitive strategy; skills relatedness is more important than product relatedness; the type of local competitive intensity is important; corporate support and local strategy operate simultaneously. Practical implications Management is advised to implement a foreign subsidiary’s competitive strategy by recognizing the mechanisms identified in this study. Originality/value In a unique way, the study captures the role of corporate support of a foreign subsidiary’s competitive strategy relying on business relatedness and the importance of aligning the strategy with competitive intensity.

Audit firms and industry specialization in an emerging economy

2018 ◽  
Vol 14 (3) ◽  
pp. 338-362
Author(s):  
Karim Hegazy ◽  
Mohamed Hegazy
Keyword(s):  
Financial Services ◽  
Capital Investment ◽  
Emerging Economy ◽  
Annual Reports ◽  
Brand Name ◽  
Industry Specialization ◽  
Content Type ◽  
Audit Firm ◽  
Big 4 ◽  
Audit Firms

PurposeThis study aims to investigate the implications of audit industry specialization on auditor’s retention and growth within an emerging economy. Factors such as whether the firm is a Big 4, a firm with international affiliation, a local firm and the type of industry were studied to analyse the reasons behind audit firm retention and growth.Design/methodology/approachThis research is based on a field study related to audit firms providing services to listed companies in an emerging economy. The sample includes the top 100 publicly held companies’ in the Egyptian stock market during 2006-2011 for which their annual reports are analysed to determine the audit firms’ retention and growth. An assessment of the continuity of the auditors and the increase in the number of audit clients were also measured.FindingsThe results confirm that industry specialization has an important effect on the auditor’s retention, especially for industries where capital investment is significant such as buildings, construction, financial services, housing and real estate. Big 4 audit firms retained their clients because of their industry specialization and brand name. Evidence was found that good knowledge of accounting and auditing standards resulted in audit firms with international affiliation competing with the Big 4 for clients’ retention and growth.Originality/valueThis study contributes to the existing literature, as it is among the first to provide empirical evidence on auditor retention, growth and auditor’s dominance in an emerging economy such as Egypt.

scholarly journals Evaluation of Whole-Genome Sequencing for Identification and Typing of Vibrio cholerae

2018 ◽  
Vol 56 (11) ◽  
Author(s):  
David R. Greig ◽  
Ulf Schaefer ◽  
Sophie Octavia ◽  
Ebony Hunter ◽  
Marie A. Chattaway ◽  
...  
Keyword(s):  
Public Health ◽  
Whole Genome Sequencing ◽  
Vibrio Cholerae ◽  
Species Identification ◽  
Genome Sequencing ◽  
National Level ◽  
Whole Genome ◽  
Content Type ◽  
El Tor ◽  
The Impact

ABSTRACT Epidemiological and microbiological data on Vibrio cholerae strains isolated between April 2004 and March 2018 (n = 836) and held at the Public Health England culture archive were reviewed. The traditional biochemical species identification and serological typing results were compared with the genome-derived species identification and serotype for a subset of isolates (n = 152). Of the 836 isolates, 750 (89.7%) were from a fecal specimen, 206 (24.6%) belonged to serogroup O1, and 7 (0.8%) were serogroup O139; 792 (94.7%) isolates were from patients reporting recent travel abroad, most commonly to India (n = 209) and Pakistan (n = 104). Of the 152 V. cholerae isolates identified by use of kmer, 149 (98.1%) were concordant with those identified using the traditional biochemical approach. Traditional serotyping results were 100% concordant with those of the whole-genome sequencing (WGS) analysis for the identification of serogroups O1 and O139 and classical and El Tor biotypes. ctxA was detected in all isolates of V. cholerae O1 El Tor and O139 belonging to sequence type 69 (ST69) and in V. cholerae O1 classical variants belonging to ST73. A phylogeny of isolates belonging to ST69 from U.K. travelers clustered geographically, with isolates from India and Pakistan located on separate branches. Moving forward, WGS data from U.K. travelers will contribute to global surveillance programs and the monitoring of emerging threats to public health and the global dissemination of pathogenic lineages. At the national level, these WGS data will inform the timely reinforcement of direct public health messaging to travelers and mitigate the impact of imported infections and the associated risks to public health.

Internal audits in the digital era: opportunities risks and challenges

2020 ◽  
Vol 15 (2) ◽  
pp. 205-217
Author(s):  
Petros Lois ◽  
George Drogalas ◽  
Alkiviadis Karagiorgos ◽  
Kostantinos Tsikalakis
Keyword(s):  
Virtual Teams ◽  
Internal Audit ◽  
Cyber Attacks ◽  
Continuous Auditing ◽  
Content Type ◽  
Audit Firm ◽  
Digital Era ◽  
Specific Implementation ◽  
The Impact ◽  
And Training

PurposeThe aim of this study is to examine continuous auditing in the digital age from the perspective of audit firm employees. It also investigates contemporary factors affecting continuous auditing, as well as the techniques that could be utilised for its implementation.Design/methodology/approachInternal audit departments of private companies were contacted via email and given a questionnaire developed based on the extant literature. The sample consisted of 105 individuals employed in the largest audit institutions in Greece. Data were analysed using multiple regression.FindingsAs expected, technological advances are indispensable for the establishment of an effective digital auditing system. The impact of data protection measures against cyber-attacks as well as employees' skills and training were found to be significant. Particular attention should be given to the preparation and building of virtual auditing teams.Research limitations/implicationsThe fact that the digital era is still nascent with its final outcomes not yet visible makes it difficult to produce accurate predictions and draw conclusions. Further, there is a need to survey salient stakeholders in other country contexts beyond Greece pursuant of producing generalisable results.Practical implicationsThe actions taken by companies to ensure cyber security and the formation of virtual teams were found to be highly significant for the implementation of a real-time auditing process. Traditionally, factors such as cost and time play an important role in optimising internal continuous auditing. Technological advancements combined with careful, strategic and case-specific implementation have the potential to enhance the efficacy of older methods.Social implicationsThe positive propensity of staff to adopt technology and modern techniques illustrates how implementation difficulties can be overcome through the redefinition and scheduling of an organisation's objectives and training of its personnel.Originality/valueAudit firm employees highlighted the protection of personal data, the avoidance of cyber-attacks and training as major continuous internal auditing goals. The results indicate acceptance towards technology and modern techniques, provided companies ensure adequate preparation and staff training conditions.

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