The impact of changes in cash flow statement items on audit fees: evidence from Iran
Journal of Financial Reporting and Accounting
ISSN: 1985-2517
Article publication date: 19 May 2020
Issue publication date: 2 June 2020
Abstract
Purpose
The purpose of this study is to determine whether the incremental difference between the actual level of cash from the optimal amount (excess and insufficient cash) to the abnormal amount of cash (abnormal positive and negative changes in cash) leads to an increase in audit fees.
Design/methodology/approach
To investigate the main purpose of this study, first, the authors, respectively, estimate the optimal cash flow and the normal (optimal) changes in cash by Oler and Picconi (2014) and Bates, Kahle and Stulz (2009) models for each period. In this regard, financial information of 116 companies listed on the Tehran Stock Exchange is selected during the period 2011-2016.
Findings
The results of this investigation indicate that holding an excessive amount of cash than optimal size and audit fees are negatively associated. Moreover, it is documented that abnormal changes in cash flow and audit fees are not significantly associated.
Originality/value
The outcomes of the current study contribute to providing an accurate estimation to determine audit fees in emerging markets.
Keywords
Citation
Salehi, M., BehrouziYekta, M. and Rezaei Ranjbar, H. (2020), "The impact of changes in cash flow statement items on audit fees: evidence from Iran", Journal of Financial Reporting and Accounting, Vol. 18 No. 2, pp. 225-249. https://doi.org/10.1108/JFRA-09-2018-0074
Publisher
:Emerald Publishing Limited
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