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 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 CEO tenure and specialization on timely audit reports of Iranian listed companies

2018 ◽  
Vol 56 (2) ◽  
pp. 311-328 ◽  
Author(s):  
Mahdi Salehi ◽  
Mahmoud Lari Dasht Bayaz ◽  
Mohamadreza Naemi
Keyword(s):  
Significant Relationship ◽  
Design Methodology ◽  
Stock Exchange ◽  
Listed Companies ◽  
Audit Report ◽  
Content Type ◽  
Natural Logarithm ◽  
Ceo Tenure ◽  
Financial Expertise ◽  
Audit Reports

Purpose The purpose of this paper is to examine whether the characteristics of a CEO, that is, tenure and financial expertise, could affect the timeliness of an audit report. Design/methodology/approach Research data gathered from listed companies on the Tehran Stock Exchange during the four-year period 2013-2016. Findings The results obtained from model fittings indicated that there is only a negative and significant relationship between CEO financial expertise and natural logarithm of audit report lag and no significant relationship observed between the former and two other indices of timely audit report. Moreover, no significant relationship was found between the CEO tenure and other three indices of timely audit report. Originality/value This paper is the first study, which developed the literature of timely audit report using CEO tenure effect and financial expertise tests for timely audit reports in Iran.

CFO attributes and accounting conservatism: evidence from Malaysia

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ismaanzira Ismail ◽  
Rohami Shafie ◽  
Ku Nor Izah Ku Ismail
Keyword(s):  
Propensity Score ◽  
Financial Reporting ◽  
Design Methodology ◽  
Audit Quality ◽  
Education Level ◽  
Accounting Conservatism ◽  
Chief Financial Officer ◽  
Content Type ◽  
Listed Firms ◽  
Emerging Country

Purpose This paper aims to examine whether conditional conservatism is affected by chief financial officer (CFO) attributes as this issue is understudied in Malaysia. Given that CFOs have a direct responsibility for financial reporting, therefore, their individual attributes are important in influencing conservatism in financial reporting. Design/methodology/approach This study uses non-financial listed firms in the Main Market of Bursa Malaysia from the years 2016 until 2019. Findings The results show that CFOs’ attributes, namely, gender, age, education level and ethnicity, affect earnings conservatism. To test for robustness, the authors use difference-in-difference, propensity score-matching and unconditional conservatism, namely, market-to-book ratio and the authors find the results hold with an exception for age and education level. Further, the effect of these attributes is more profound in non-Big4 audited firms, suggesting that CFO attributes act as a substitute mechanism for lower audit quality. Originality/value This study complements existing studies by documenting the first evidence on the significant effects of CFOs’ attributes in influencing accounting conservatism in an emerging country, namely, Malaysia. This is the first paper, to the humble knowledge, that examines CFOs’ attributes on accounting conservatism in Malaysia.

The effects of audit quality on the costs of capital of firms in Ghana

2018 ◽  
Vol 16 (4) ◽  
pp. 639-659 ◽  
Author(s):  
William Coffie ◽  
Ibrahim Bedi ◽  
Mohammed Amidu
Keyword(s):  
Audit Quality ◽  
Cost Of Capital ◽  
Stock Exchange ◽  
Low Cost ◽  
Cost Of Debt ◽  
Future Research ◽  
Content Type ◽  
Listed Firms ◽  
Financial Firms ◽  
The Cost

PurposeThis paper aims to investigate the effects of audit quality on the cost of capital in Ghana.Design/methodology/approachNon-financial firms listed on the Ghana Stock Exchange (GSE) as well as non-listed firms from the database of Ghana Club 100 were included in the sample. Series are yearly, covering a sample of 40 firms during the six-year period, 2008-2013. The study employed the positivist research paradigm to establish the relationship between audit quality and the cost of capital.FindingsThere is evidence to suggest that the cost of debt and the overall cost of capital of firms in Ghana can be explained by the quality of the external auditors. The results also show that the large size of the board is associated with low cost of debt.Research limitations/implicationsThe fact that the choice of quality measure is based on firm size only and other measurements of audit quality could not be measured. Future research may examine how other approaches to measuring audit quality affect cost of capital.Practical implicationsThe results significant for those charged with assurance and regulation, as well as lenders and managers of companies.Originality/valueThe authors investigate how external auditing quality affects the cost of capital of firms operating in Ghana.

The relationship between audit quality and risk taking toward value creation in Indonesia

2019 ◽  
Vol 9 (2) ◽  
pp. 251-267 ◽  
Author(s):  
Mangesti Sri ◽  
Solimun Solimun
Keyword(s):  
Value Creation ◽  
Risk Taking ◽  
Audit Quality ◽  
Stock Exchange ◽  
Ownership Concentration ◽  
Content Type ◽  
Audit Market ◽  
Fixed And Random Effects ◽  
The Relationship ◽  
Auditor Specialization

Purpose The purpose of this paper is to evaluate the effect between audit quality and risk taking on value creation. Design/methodology/approach Population under study is companies on the Jakarta Stock Exchange from 2004 to 2015. Considering the limitations, 145 companies studied in this research, which made a sample containing 1,740 company-years. This study is based on the panel data and multivariate regression method. This research uses fixed and random effects to estimate the regression. In this paper, five components of audit quality, including auditor specialization, tenure, audit firm size, ownership concentration and the percentage of unbounded members of the board, are studied. Findings The results of this study indicate that among these five components as well as the risk factor, only tenure and ownership concentration have a significant effect on value creation of companies. In other words, both ownership concentration and tenure are positively effective in value creation and other variables have no significant effect on value creation. Besides, none of them could affect the risk taking on value creation. Originality/value The outcomes of the current study help audit market and capital market in developing nations.

The effect of audit fees pressure on audit quality during the sanctions in Iran

2017 ◽  
Vol 59 (1) ◽  
pp. 66-81 ◽  
Author(s):  
Mahdi Salehi ◽  
Azadeh Jafarzadeh ◽  
Zeinab Nourbakhshhosseiny
Keyword(s):  
Significant Relationship ◽  
Audit Quality ◽  
Stock Exchange ◽  
Quality Criterion ◽  
Audit Fees ◽  
Content Type ◽  
Before And After ◽  
Research Population ◽  
Business Entities ◽  
Cent Error

Purpose The current study aims to investigate the amount of downward pressure on audit fees and its effect on audit quality. Design/methodology/approach The research population includes 104 listed companies on the Tehran Stock Exchange. In this study, at first, the audit fees pressure was measured; then, by comparing it with actual audit fees, the pressure on audit costs was calculated. Finally, the hypotheses were tested using logistic regression. Findings The results of models and hypotheses show that, as expected, during the intensification of sanctions (i.e. during 2010), compared with other years, business entities have exerted more pressure to reduce audit fees; moreover, there is a positive significant relationship between fees pressure and the rate of misstatement (reverse audit quality criterion) at 10 per cent error level during 2010, whereas in years before and after 2010, there is no significant relationship between audit fees pressure and audit quality. Originality/value The conducted studies in Iran so far have investigated time pressures imposed on auditors. In this study, the audit fees pressure is investigated.

Does Big N matter for audit quality? Evidence from Japan

2019 ◽  
Vol 27 (1) ◽  
pp. 2-28 ◽  
Author(s):  
Hu Dan Semba ◽  
Ryo Kato
Keyword(s):  
Audit Quality ◽  
Market Competition ◽  
Fiscal Year ◽  
Litigation Risk ◽  
Bankruptcy Risk ◽  
Content Type ◽  
Audit Market ◽  
Accounting Scandals ◽  
Audit Firms ◽  
Before And After

Purpose There has been growing concern worldwide regarding audit quality in Japan after the Kanebo and Olympus accounting scandals. The purpose of this paper is to examine the Japanese audit market from 2001 to 2011 to determine whether audit quality differs between Big N and Non-Big N audit firms and whether this difference, if existed, changed during 2007 when the number of big audit firms declined from four to three and the requirements of audit quality became more rigorous. Design/methodology/approach This study employs a sample of Japanese listed firms from fiscal year 2001 to 2011. Five proxy variables for audit quality are used and the data are analyzed using the propensity score matching method. Findings The authors show that irrespective of their size, all audit firms in Japan provide the same quality of service, when controlling for client characteristics including keiretsu, foreign sales ratio and bankruptcy risk measured in Japan. Additionally, the results suggest that although only three major audit firms remain in the Japanese audit market after the dissolution of PricewaterhouseCooper’s Chuo-Aoyama firm in 2007, the audit quality difference between Big N and Non-Big N remained unchanged before and after 2007. Originality/value The study contributes to the lack of existing empirical evidence on audit quality in Japan, a country characterized with low audit litigation risk and more emphasis on auditor reputation, given the influence of the notable change in Japanese audit market competition from Big 4 to Big 3. The study’s research design contributes to the extant literature by using multiple proxies of audit quality.

Market Competition, Audit Fee Stickiness, and Audit Quality: Evidence from China

2018 ◽  
Vol 38 (2) ◽  
pp. 79-99 ◽  
Author(s):  
Hsihui Chang ◽  
Yingwen Guo ◽  
Phyllis Lai Lan Mo
Keyword(s):  
Earnings Management ◽  
Audit Quality ◽  
Market Competition ◽  
Positive Association ◽  
Certified Public Accountants ◽  
Listed Firms ◽  
Audit Market ◽  
Audit Firms ◽  
Audit Fee ◽  
Auditor Reporting

SUMMARY This study examines how audit fee stickiness varies with changes in market competition in China and its effect on audit quality. The Chinese audit market structure has changed significantly since the Chinese Institute of Certified Public Accountants (CICPA) issued a proposal to enhance the competitiveness of large domestic audit firms by promoting the consolidation of domestic audit firms in 2007. Using a sample of Chinese listed firms, we find a decrease in upward stickiness and an increase in downward stickiness as market concentration increases in the post-Proposal period. The asymmetry between upward and downward fee stickiness is greater in local markets that are more dominated by the top 10 domestic auditors. Moreover, we find that upward (downward) fee stickiness has a negative (positive) association with audit quality as measured by earnings management and auditor reporting conservatism. JEL Classifications: D40; M42.

Direct and mediated associations among earnings quality, book-tax differences and the audit quality

2017 ◽  
Vol 15 (3) ◽  
pp. 293-316 ◽  
Author(s):  
Rakia Riguen Koubaa ◽  
Anis Jarboui
Keyword(s):  
Audit Quality ◽  
Stock Exchange ◽  
Earnings Quality ◽  
Structural Equations ◽  
Accounting Conservatism ◽  
Mediation Effect ◽  
Audit Process ◽  
Content Type ◽  
Listed Firms ◽  
Academic Researchers

Purpose The purpose of this paper is to investigate the direct and indirect links between book-tax differences (BTDs) and audit quality using accounting conservatism (proxy of earnings quality). Hence, this paper seeks to extend prior audit quality research. Design/methodology/approach This study uses a sample of Tunisian listed firms on the Tunis Stock Exchange and operating in the industrial and commercial sectors during 2005-2012. This investigation is motivated by structural equations system models that specify both a direct link and an indirect link that is mediated by information reflected in BTDs. Findings The results show that for the Tunisians companies, firms with large BTDs are associated with higher audit quality implies that such BTDs represent an observable proxy for earnings quality that affects auditor decisions. The authors find statistically an indirect link between abnormal BTDs and audit quality that is mediated by earnings quality. The current study also provides evidence that information reflected in BTDs can improve audit quality. Practical implications The findings may be of interest to the academic researchers, practitioners and regulators who are interested in discovering the informational value of BTDs in the audit process. Originality/value This paper extends the existing literature by examining the mediation effect of information reflected in BTDs on relationship between BTDs and audit quality.

The effect of business uncertainty on IT governance

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Sylvia Veronica Siregar ◽  
Siti Nurwahyuningsih Harahap
Keyword(s):  
Design Methodology ◽  
Stock Exchange ◽  
Random Effect ◽  
It Governance ◽  
Positive Association ◽  
Developed Countries ◽  
Emerging Countries ◽  
Significant Positive Association ◽  
Content Type ◽  
Listed Firms

Purpose The purpose of this study is to examine the effect of business uncertainty on the information technology (IT) governance of listed firms in Indonesia. Design/methodology/approach The samples are listed firms in Indonesia Stock Exchange for the years 2015–2018. Total observations are 1,215 firm years. The authors used the random effect panel regression to test the hypotheses. Findings The authors find that business uncertainty has a significant positive association with IT governance, consistent with the prediction. Companies with higher business uncertainty are in higher demand for implementing IT governance. Originality/value The authors have not found previous studies that examine business uncertainty as to the determinant of IT governance. The authors also examined the IT governance in Indonesia, one of the emerging countries. Most previous studies on IT governance were conducted in developed countries, which results may not be generalized to emerging countries.

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