The relationship between audit quality and Investment efficiency

This paper presents an economic framework to study strategic interactions along the analyst-auditor-owner disciplinary chain, in which the auditor examines the financial reports prepared by the owner, and the analyst uncovers financial misreporting as well as audit failure. We find that although analyst scrutiny ex post detects misreporting, it ex ante aggravates the owner's misreporting behavior and further impairs financial statement reliability if the legal penalties for the auditor and the owner are small. We also show how the effects of a regulation depend on its target's disciplinarian(s). Specifically, (i) although enhancing the auditor's legal liability always increases audit quality and financial statement reliability, it decreases investment efficiency if and only if the analyst is highly independent; and (ii) increasing the owner's misreporting penalty decreases investment efficiency if and only if either of (but not both) the regulations on the auditor and the analyst is strict.

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Investigating the Relationship Between Ownership Structure and Investment Efficiency in Emerging Markets: Evidence From the Egyptian Stock Market

International Journal of Accounting and Financial Reporting ◽

10.5296/ijafr.v8i4.13630 ◽

2018 ◽

Vol 8 (4) ◽

pp. 1

Author(s):

Ahmed Sayed Rashed ◽

Ebitihj Mostafa Abd ◽

Esraa Fathi Mohamed Ismail ◽

Doaa Mohamed Abd El Samea

Keyword(s):

Ownership Structure ◽

Stock Exchange ◽

Panel Data Analysis ◽

Negative Relationship ◽

Institutional Ownership ◽

Managerial Ownership ◽

Investment Efficiency ◽

Outside Director ◽

Director Ownership ◽

The Relationship

This paper aims to examine the relationship between Ownership Structure Mechanisms (Managerial Ownership, Institutional Ownership, Block holder Ownership and Outside Director Ownership) and Investment Efficiency by using panel data analysis. To investigate this relationship used the multiple regression models. Findings of investigation of 35 firms listed on the Egyptian Stock Exchange in the period 2006 to 2015 by balanced Panel model representative. Results indicated that Managerial Ownership isn’t related with investment efficiency. In contract, institutional ownership, block holder ownership and outside director ownership have a negative relationship with investment efficiency. In addition, the researcher found that control variables (Firm size, Debt ratio, Tobin’s Q) not related to investment efficiency. These findings imply that the Majority of Egyptians firms relies on institutional without individual ownership and then reduces much of possible from agency problems and decreasing information asymmetry and facilitating the monitoring of investment decisions.

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Corporate political connections, agency costs and audit quality

International Journal of Accounting and Information Management ◽

10.1108/ijaim-05-2016-0061 ◽

2016 ◽

Vol 24 (4) ◽

pp. 357-374 ◽

Cited By ~ 11

Author(s):

Arifur Khan ◽

Dessalegn Getie Mihret ◽

Mohammad Badrul Muttakin

Keyword(s):

Agency Costs ◽

Audit Quality ◽

Agency Cost ◽

Political Connections ◽

Political Connection ◽

Data Set ◽

Research Attention ◽

Content Type ◽

Big 4 ◽

The Relationship

Purpose The effect of political connections of agency costs has attracted considerable research attention due to the increasing recognition of the fact that political connection influences corporate decisions and outcomes. This paper aims to explore the association between corporate political connections and agency cost and examine whether audit quality moderates this association. Design/methodology/approach A data set of Bangladeshi listed non-financial companies is used. A usable sample of 968 firm-year observations was drawn for the period from 2005 to 2013. Asset utilisation ratio, the interaction of Tobin’s Q and free cash flow and expense ratio are used as alternative proxies for agency costs; membership to Big 4 audit firms or local associates of Big 4 firms is used as a proxy for audit quality. Findings Results show that politically connected firms exhibit higher agency costs than their unconnected counterparts, and audit quality moderates the relationship between political connection and agency costs. The results of this paper suggest the importance of audit quality to mitigate agency problem in an emerging economic setting. Research limitations/implications The findings of this paper could be of interest to regulators wishing to focus regulatory effort on significant issues influencing stock market efficiency. The findings could also inform auditors in directing audit effort through a more complete assessment of risk and determining reasonable levels of audit fees. Finally, results could inform financial statement users to direct investments to firms with lower agency costs. Originality/value To the knowledge of the authors, this study is one of the first to explore the relationship between political connection and agency costs, and the moderating effect of audit quality of this relationship.

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An Examination of the Effects of Change in Committee Chair on Audit Quality

Accounting and Finance Research ◽

10.5430/afr.v6n4p52 ◽

2017 ◽

Vol 6 (4) ◽

pp. 52

Author(s):

Izhar Haq ◽

Teresa Lang ◽

Hongkang Xu

Keyword(s):

Audit Committee ◽

Audit Quality ◽

Financial Statements ◽

Discretionary Accruals ◽

Committee Chair ◽

The Absolute ◽

Predicted Values ◽

The Relationship ◽

A Company

This study uses GMI Ratings directorship data from 2008 to 2013 along with the associated financial data to examine the relationship between audit committee chair change with the absolute discretionary accruals in the financial statements of the reporting companies. Our results suggest that audit committee chair change is positively associated with the absolute discretionary accruals. Specifically, absolute discretionary accruals are significantly higher when there is a change in the audit committee chair. These results are consistent with prior research that deviations from the predicted values of accruals is an indicator of “poor” audit quality. An additional finding of this paper is that a person younger than 60 is more likely to be a new audit committee chair when there is a change and therefore will have less experience and contacts than the outgoing chair. An important implication of these results is that audit committee chair change can have a significant impact on the quality of the financial statements of a company as well as on the audit quality.

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Kualitas Audit: Ditinjau dari Fee Audit, Risiko Audit dan Skeptisme Profesional Auditor sebagai Variabel Moderating

Ekuitas Jurnal Pendidikan Ekonomi ◽

10.23887/ekuitas.v8i1.22474 ◽

2020 ◽

Vol 8 (1) ◽

pp. 9

Author(s):

Muslim Muslim ◽

Syamsuri Rahim ◽

Muhammad Faisal AR Pelu ◽

Alma Pratiwi

Keyword(s):

Regression Analysis ◽

Audit Quality ◽

Audit Fees ◽

Public Accounting ◽

Audit Risk ◽

Accounting Firms ◽

Professional Skepticism ◽

Audit Fee ◽

The Relationship ◽

Positive Effect

The purpose of this study was to determine the effect of audit fees and audit risk on audit quality with auditor professional skepticism as a moderating variable. This research was conducted at 8 public accounting firms in Makassar city with 40 respondents. The analytical method used is multiple regression analysis (Moderated Regression Analysis) which is used to measure the strength of the relationship between two or more variables. The results of this study found that the audit fee variable had a negative and not significant effect on audit quality. These results illustrate that the higher the audit fee received by the auditor, the audit quality will decrease. While audit risk is not a significant positive effect on audit quality. The results of this study illustrate that the higher the audit risk, the audit quality will decrease. The auditor's professional skepticism as a moderating variable is not able to strengthen the effect of audit fees on audit quality. Furthermore, auditor professional skepticism as a moderating variable is also unable to strengthen the effect of audit risk on audit quality

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KEMAMPUAN AUDIT TENURE MEMODERASI PENGARUH PENGALAMAN DAN SKEPTISISME AUDITOR DENGAN KUALITAS AUDIT

Jurnal Ilmiah Akuntansi ◽

10.23887/jia.v2i1.9670 ◽

2017 ◽

Vol 2 (1) ◽

Author(s):

I Gusti Ayu Nyoman Budiasih ◽

Ketut Budiartha

Keyword(s):

Data Analysis ◽

Audit Quality ◽

Total Sample ◽

Financial Reports ◽

Auditor Quality ◽

Sample Data ◽

Client Pressure ◽

Relationship Of ◽

The Relationship

ABSTRAKPentingnya laporan keuangan bagi banyak pihak, menyebabkan laporan tersebut harus disajikan secara relevan dan reliabel. Kualitas audit yang baik dapat menyebabkan laporan keuangan semakin dipercaya keasliannya. Kualitas audit tergantung pada independensi dan kompetensi auditor. Independensi dan kompetensi seorang auditor tergantung pada pengalaman maupun sikap skeptis yang dimiliki auditor tersebut. Pengalaman auditor akan meningkat dikarenakan telah terbiasa dengan pekerjaannya sehingga auditor akan bekerja secara efisien dan lebih tahan terhadap tekanan klien. Sampel yang dipilih menggunakan teknik sampel jenuh dengan jumlah sampel sebanyak 85 auditor. Pengumpulan data dilakukan dengan menyebarkan kuesioner kepada auditor yang menjadi sampel penelitian. Teknik analisis datanya menggunakan analisis regresi tanpa dan dengan variabel moderasi. Berdasarkan hasil analisis data dan pembahasan yang telah dilakukan, maka dapat disimpulkan bahwa kualitas audit di KAP Provinsi Bali memiliki hubungan secara positif dengan pengalaman dan skeptisisme auditor, audit tenure tidak mampu memoderasi hubungan pengalaman auditor dengan kualitas audit auditor di KAP Provinsi Bali, dan audit tenure mampu memoderasi hubungan skeptisisme auditor dengan kualitas audit auditor di KAP Provinsi Bali.Kata Kunci: audit tenure, pengalaman , skeptisisme auditor, kualitas audit ABSTRACTThe importance of financial statements for many, causing the report to be presented in a relevant and reliable manner. A good audit quality can lead to more authentic financial reports. The quality of the audit depends on the independence and competence of the auditor. The independence and competence of an auditor depends on the experience and skepticism of the auditor. The experience of the auditor will increase due to the familiarity with the work so that the auditor will work efficiently and more resistant to client pressure. The samples were selected using a sample saturated technique with a total sample of 85 auditors. Data collection was done by distributing questionnaires to the auditor who became the research sample. Data analysis techniques use regression analysis without and with moderation variables. Based on the results of data analysis and discussion that have been done, it can be concluded that the audit quality in KAP Bali Province has a positive relationship with the experience and skepticism of auditors, audit tenure unable to moderate the relationship of auditor experience with audit auditor quality in KAP Bali Province and audit tenure able to moderate the relationship of auditor skepticism with audit auditor quality in KAP Bali Province.Keywords: audit tenure, experience, auditor skepticism, audit quality

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