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1 – 10 of 610Silu Cheng and Wenyao Hu
This study explores how auditors' emotions, specifically negative moods triggered by flight delays, impact auditing quality.
Abstract
Purpose
This study explores how auditors' emotions, specifically negative moods triggered by flight delays, impact auditing quality.
Design/methodology/approach
Utilizing flight delays during audit assignments as a mood indicator, weather conditions at departure airports serve as an instrumental variable to provide a robustness check between flight delays and audit outcomes, employing a two-stage least squares model.
Findings
The findings suggest that such negative moods improve auditing effort and quality, as evidenced by reduced future accounting restatements and increased audit fees. The positive effect of flight delays on auditing quality is consistent across different tests and measures.
Originality/value
This study highlights the significance of auditors' emotional states on their professional performance, indicating a unique angle on auditing quality research by focusing on the emotional well-being of auditors as influenced by external factors such as flight delays.
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This paper examines the organizational resilience of audit firms during the early stages of COVID-19. The unexpected restrictions placed on travel and on-site working created…
Abstract
Purpose
This paper examines the organizational resilience of audit firms during the early stages of COVID-19. The unexpected restrictions placed on travel and on-site working created unanticipated barriers for auditors in Hong Kong. The authors expect that auditors with greater organizational resilience can respond to unexpected situations and restore expected performance levels relatively quickly.
Design/methodology/approach
The authors utilize a sample of 1,008 companies listed on Hong Kong Stock Exchange (HKEX) with a financial year-end of December 31. The authors identify five proxies contributing to organizational resilience: auditor size, industry specialization, diversity, geographic proximity to the client and auditing a new client. The authors use audit report timeliness as this study's main dependent variable.
Findings
This study's full-sample results suggest that larger auditors, industry specialists and auditors with closer relationships to clients issued more timely audit reports during the pandemic. The analysis of a subsample of companies that initially published unaudited financial statements reveals that industry expertise and longer auditor-client relationships significantly reduced the need for year-end audit adjustments. Finally, the authors find that larger auditors were more likely to offload clients, whereas industry specialists were more likely to retain clients.
Research limitations/implications
The results of the paper suggests that audit firm characteristics associated cognitive abilities, behavioral characteristics and contextual conditions are associated with audit firm organizational resilience and, consequently, helps auditors respond unexpected changes in the audit environment.
Practical implications
The findings of the paper are informative for those involved in audit firm management or auditor hiring and retention decisions.
Originality/value
This study is the first to link organizational resilience to the performance of audit firms in a time of unexpected events. The authors connect three auditor and two auditor-client dimensions to the organizational resilience of the audit firms.
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Fredrik Hartwig, Emil Hansson, Linn Nielsen and Patrik Sörqvist
The purpose of this study is to examine the relationship between auditing/non-auditing and accounting timeliness among Swedish private firms.
Abstract
Purpose
The purpose of this study is to examine the relationship between auditing/non-auditing and accounting timeliness among Swedish private firms.
Design/methodology/approach
This paper uses regression analysis to test the relationship between auditing and two measurements of timeliness; lead time and late filing. The sample consists of Swedish private firms.
Findings
This paper finds that audited firms, when compared with unaudited firms, are significantly less timely. Moreover, greater profitability was associated with more timeliness but only for audited firms. The results of this paper also show that firms being audited by a big 4 auditor are significantly timelier than firms being audited by a non-big 4 auditor.
Practical implications
The findings in this paper suggests that one aspect of accounting quality, timeliness, does not seem to benefit from auditing in a Swedish context. There is a debate about whether the threshold levels in Sweden should be raised so that more firms voluntarily can opt out of audit. Those opposing a raised threshold level claim that auditing has positive effects on accounting quality and consequently that a raised level would have adverse effects. The findings in this paper do not support such a claim.
Originality/value
Little is known about timeliness in private firms compared to public firms and this paper fills that void. Contrary to prior research, findings show that unaudited firms in a Swedish regulatory setting actually are timelier than their audited counterparts. This questions one of the (presumed) benefits of auditing and should stimulate more research on this issue.
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Muhammad Rifqi Abdillah, Agus Widodo Mardijuwono and Habiburrochman Habiburrochman
The purpose of this paper is to examine and analyze the factors that affect an auditor’s efficiency in completing the audit process proxied by audit report lag. The factors used…
Abstract
Purpose
The purpose of this paper is to examine and analyze the factors that affect an auditor’s efficiency in completing the audit process proxied by audit report lag. The factors used in this study are selected by looking at the characteristics of the company and the characteristics of an auditor.
Design/methodology/approach
Company characteristics were proxied by the audit committee effectiveness, financial condition, accounting complexity and profitability, whereas auditor characteristics were proxied with auditor reputation, audit tenure and auditors industry specialization. Populations of this study were all manufacturing companies listed in Indonesian Stock Exchange in 2014–2016. Based on the purposive sampling method, the number of samples obtained from 231 companies was 77. Multiple linear regression method was used to analyze this study. Hypothesis testing was done by statistical t-test (partial).
Findings
The results showed that partially variables of the audit committee effectiveness and profitability had a significant negative effect on audit report lag while the variable financial condition had a significant positive effect on audit report lag. Meanwhile, variables of the accounting complexity, auditor reputation, audit tenure and auditors’ industry specialization did not show significant influence on audit report lag.
Originality/value
This study tests both company’s and auditor’s characteristic on audit report lag that as far as authors know never been tested simultaneously.
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The purpose of this study is to examine the nexus between corporate characteristics and timeliness of financial reporting in Saudi Arabia. Specifically, this study investigates…
Abstract
Purpose
The purpose of this study is to examine the nexus between corporate characteristics and timeliness of financial reporting in Saudi Arabia. Specifically, this study investigates the relationship between financial reporting timeliness and both corporate size, profitability, leverage and institutional ownership.
Design/methodology/approach
A sample of 67 of nonfinancial companies listed in the Saudi market during the period 2015–2018 was used. Multivariate regression analysis was performed to analyze the relationship between the four corporate characteristics and timeliness of financial reporting.
Findings
The findings revealed that financial reporting timeliness is significantly correlated with three of the corporate's characteristics, which are company size, profitability and leverage, while there is no significant effect of institutional ownership on the timeliness of financial reporting.
Research limitations/implications
The findings of this study may not be generalizable to all companies listed in the Saudi market as a result of limiting the study to nonfinancial companies and excluding financial companies from the sample. Future research may explore the determinants of the timeliness of these companies' financial reporting.
Practical implications
Given the significant interest expressed by investors, regulators and researchers in the field of financial reporting timeliness, especially in emerging markets where financial reports are almost the main and only source of information, this study highlights the role that corporate characteristics play in influencing the financial reporting timeliness in Saudi Arabia as one of emerging markets.
Originality/value
Despite the importance of financial reporting timeliness, there are very few studies that have examined this issue in Saudi Arabia. This study contributes to bridging this gap by examining the relationship between the corporate characteristics and the timeliness of financial reports.
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Mahdi Salehi, Tamanna Dalwai and Arash Arianpoor
The present study aims to assess the impact of narcissism, self-confidence and auditor's characteristics on audit report readability for companies listed on the Tehran Stock…
Abstract
Purpose
The present study aims to assess the impact of narcissism, self-confidence and auditor's characteristics on audit report readability for companies listed on the Tehran Stock Exchange.
Design/methodology/approach
The study’s statistical population comprises firms listed on the Tehran Stock Exchange. The present research used a systematic elimination method, and 1,162 firm-year observations were obtained for seven years from 2012 to 2018. Three variables including auditor tenure, audit fee and audit specialization are used for measuring auditing features. The Fog index is used as a proxy for measuring audit report readability. In addition, in this paper, four regressions, including fixed effects, random effects, pooled and T+1, are used to estimate reliable coefficients.
Findings
The findings show a negative and significant relationship between auditor’s characteristics (tenure, fee and specialization) and audit report readability. Moreover, the variables of the auditor’s narcissism, self-confidence and mandatory auditor change have a positive and significant association with audit report readability. This study lends support to the theories of personality disorder and behavioral decision.
Originality/value
Since narcissism and self-confidence are two characteristics that shape an individual’s character and personality, some involved behavioral factors in auditors’ characteristics contribute to their decisions. The effects of these should be detected to enhance the decision-making process. The said factors significantly impact audit report readability. Hence, this paper attempts to assess the effect of the said factors on audit report readability.
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It is argued that the going concern opinion is issued if auditors have a doubt about financial condition of a company. Provision of the going concern audit opinion may worsen the…
Abstract
Purpose
It is argued that the going concern opinion is issued if auditors have a doubt about financial condition of a company. Provision of the going concern audit opinion may worsen the company in terms of gaining public trust and may even indicate bankruptcy. This study aims to determine the factors that affect the auditor's going concern opinion.
Design/methodology/approach
This research used secondary data obtained from annual reports and independent audit reports published by the Indonesia Stock Exchange. The population of this research included manufacturing firms registered in the Indonesia Stock Exchange from 2015 to 2019. The sample after the purposive sampling technique being applied consisted of 33 companies. The data were analyzed using logistic regression performed in the statistical analysis software, SPSS 24.0.
Findings
The results indicated that leverage positively affected the going concern audit opinion, then the audit quality, profitability and liquidity negatively affected the going concern audit opinion, whereas firm size and audit lag did not affect the going concern audit opinion.
Originality/value
This study is in contrast to several existing studies on the determinants of the auditor's going concern opinion and provides knowledge on developing more factors affecting the auditor's going concern opinion.
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Gianluca Ginesti, Rosalinda Santonastaso and Riccardo Macchioni
This paper aims to investigate the impact of family involvement in ownership and governance on the quality of internal auditing.
Abstract
Purpose
This paper aims to investigate the impact of family involvement in ownership and governance on the quality of internal auditing.
Design/methodology/approach
Leveraging a hand-collected data set of listed family firms from 2014 to 2020, this study uses regression analyses to investigate the impact of family ownership, family involvement on the board, family CEO and the generational stage of the family business on the quality of internal auditing.
Findings
The results provide evidence that family ownership is positively associated with the quality of internal auditing, while later generational stages of family businesses have the opposite effect. Additional analyses reveal that the presence of a sustainability board sub-committee moderates the relationship between generational stages of family businesses and the quality of internal auditing function.
Research limitations/implications
This paper does not consider country-institutional factors and other potentially family-related antecedents or governance factors that may affect the quality of internal auditing.
Practical implications
The results are informative for investors and non-family stakeholders interested in understanding under which conditions family-related factors influence the quality of internal auditing functions.
Originality/value
This study offers fresh evidence regarding the relationship between family-related factors and the quality of internal auditing and board sub-committees that moderate such a relationship in family businesses.
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Ewald Aschauer and Reiner Quick
This study aims to investigate why and how shared service centres (SSCs) are implemented as well as how they affect audit firm practice and audit quality.
Abstract
Purpose
This study aims to investigate why and how shared service centres (SSCs) are implemented as well as how they affect audit firm practice and audit quality.
Design/methodology/approach
In this qualitative study guided by the theoretical framework of institutional theory, the authors conducted 25 semi-structured interviews in seven European countries, including 16 interviews with audit partners from Big 4 firms, 6 with audit team members, 2 with interviewees from second-tier audit firms and 1 with a member of an oversight body.
Findings
The authors show that the central rationale for audit firms to implement SSCs is economic rather than external legitimacy. The authors find that SSC implementation has substantial effects on audit practices, particularly those related to standardisation, coordination and monitoring activities. The authors also highlight the potential impacts on audit quality.
Originality/value
By exploring the motivation for and effects of SSC implementation amongst audit firms, the authors offer insights into the best practices related to subsequent change processes and audit quality.
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This paper aims to unravel the puzzle that the United Kingdom’s high-quality government accounting and fiscal architecture is associated with low-quality outcomes, including poor…
Abstract
Purpose
This paper aims to unravel the puzzle that the United Kingdom’s high-quality government accounting and fiscal architecture is associated with low-quality outcomes, including poor productivity growth, high public debt, public services which do not meet citizen expectations and historically high levels of taxation. It contributes to public sector accounting research in the fields of fiscal transparency and governance.
Design/methodology/approach
This paper uses Miller and Power’s (2013) economization framework and Dunsire’s (1990) concept of collibration to explain why being a global leader in public sector accounting reform and in fiscal and monetary architecture has not protected the UK from weak governance. The intersection of economization’s roles of accounting with modes of government accounting clarifies the puzzle.
Findings
Whereas accruals government accounting contributes to fiscal transparency, this is not a sufficient condition for well-judged policy and its effective application. Collibration is the dominant mechanism for mediation in the fiscally centralized UK, but it has failed to deliver stable outcomes, in part because Parliament is limited in its ability to hold back inappropriate behaviour by the Executive. Subjectivization has disrupted adjudication because governments at all levels resist constraints on their behaviour, with unpredictable and often damaging consequences.
Originality/value
This paper provides insights through the combined lens of economization and modes of government accounting, demonstrating the practical value of this conceptualization. Although some causes for unsatisfactory outcomes are specific to the UK, there are cautions for accounting and fiscal reformers in other countries, such as Member States of the European Union.
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