Search results

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.

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.

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.

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.

The findings of the paper are informative for those involved in audit firm management or auditor hiring and retention decisions.

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.

The purpose of this study is twofold: to examine the reliability of voluntary corporate social responsibility reporting (CSRR) to determine whether users can rely on the information released by corporations and to examine the determinants of CSRR reliability in a voluntary context.

This study analyses the information included in a sample of 190 standalone corporate social responsibility (CSR) reports issued by Canadian corporations listed on the Toronto Stock Exchange S&P/TSX Composite Index from 2016 to 2018.

The results of this study show that CSR reports lack reliability. The determinants identified (image, corporate governance and financialisation) partially explain the quality of the information disclosed. As well, the results suggest that corporations may attempt to manipulate users’ perception through their disclosures.

TThis study provides a greater understanding of the current state of CSRR in a voluntary context. It offers further insights into the strategies corporations use to manage impressions through CSR disclosures.

This study provides further empirical data as to current shortcomings of voluntary CSRR and the potential benefits of further regulation.

Few studies have specifically focused on the reliability of CSRR and its determinants in a voluntary context.

In the post-Enron era around the world, the role of auditor is widely debated. There is an increasing concern that an auditor’s continuous involvement with clients could impair audit quality – the negative view. There is also a positive view that a long auditor tenure leads to accumulation of client-specific knowledge over time, which could lead to high-quality audits. The empirical result with regards to impact of mandatory auditor rotation (MAR) is mixed world-wide. This study aims to examine whether MAR rules implemented in 2017 impact audit quality in India.

Using a unique setting in which MAR was required from 2017 to 2018 onwards in India, this study provides empirical evidence of the impact of MAR regulation on audit quality (modified audit opinion). The study uses data for 714 firms (4,284 firms) for six years (three years before MAR and three years after MAR regulation in India).

The study found that auditor tenure and MAR had significant negative impacts on audit quality, validating the “positive” view of audit tenure and audit quality. In addition, concentrated ownership had a negative impact on audit quality, implying the control and influence by concentrated ownership on auditors and audit opinion. The analysis shows that MAR regulation has not yielded the intended objective of improving audit quality in India. MAR is not a good template for improving audit quality.

The findings of the study are useful to policymakers, regulators, managers, investors and users of financial reports. The study calls for public policy on auditor rotation based on objective scientific evidence. In light of the evidence in India that MAR does not lead to better audit quality, the study calls for reset of regulatory policy in India.

The study provides valuable insights to analysts, regulators and other users of financial accounts about the implications of MAR in India.

The study is one of the few to report on the impact of MAR, particularly in the context of an emerging market economy such as India.

How can we explain the unresponsiveness of Internal Audit (IA) amid signs that fraud is arising and spreading within an organization? Internal auditors are entrusted with the formal responsibility of sounding the alarm about the risk of fraud and organizational wrongdoing. However, internal auditors failed to respond as the cross-sell fraud at Wells Fargo’s Community Bank (CB) Division unfolded over more than a decade, growing into a massive, full-fledged scandal. We examine IA as a profession and explore how the interpretation of three classic tenets of auditing (scope, compliance and materiality) may enable organizational wrongdoing to fester unattended until it erupts into yet another scandal. We conclude with implications for the socialization and practice of internal auditors, emphasizing the need for reflexivity and moral judgment in the interpretation and application of tenets so deeply ingrained in the IA profession.

This paper aims to map the evolution of research in business ethics from 1991 to 2018. It aims to identify the major themes and how they have evolved. It also aims to identify gaps in the literature for recommending future research agenda.

This study uses co-word network analysis. Co-word network analysis is a bibliometric technique used to objectively identify research themes via article keywords. The study examines articles from 1991 to 2018, which is a span encompassing a greater number of articles than previous bibliometric studies in business ethics. This time span was split into four periods and major research themes were identified for each period to map the changes in research agendas in the business ethics discipline over time.

The findings point to increasing maturation of the discipline, a slight decline in ethical decision-making research, a rise in research at the intersection of leadership and ethics and exponential growth in studies on corporate social responsibility. Ethical issues in business-to-business contexts are understudied. Research in environmental disclosures and leadership is expected to grow in the future.

This is the first study in business ethics to use keywords for analyzing the evolution of a discipline. This study encompasses more articles than any other study in business ethics. Finally, this is the only study to use co-word network analysis to study business ethics literature.

This study aims to examine whether two periods of extreme market conditions – the governance crisis and Sarbanes-Oxley Act regulatory shock of 2002 and the 2007–2008 global financial crisis – incrementally impacted the self-fulfilling prophecy effect, by examining the propensity of US firms receiving going concern modification (GCM) opinions to go bankrupt relative to their non-GCM distress risk-matched counterparts during these two crisis periods.

To assess the potential influence of the governance/regulatory shock of 2002 and the global financial crisis moderate or mitigate the self-fulfilling prophecy effect, the authors use multivariate logit analysis, regressing t + 1 bankruptcy status on time t GCM and other bankruptcy determinants, interacting crisis period dummies with the GCM variable.

GCM firms were more likely to declare bankruptcy than their distressed non-GCM counterparts, confirming prior research documenting the existence of a self-fulfilling prophecy effect. The authors also find that the self-fulfilling prophecy effect was exacerbated by the governance crisis/Sarbanes-Oxley Act regulatory shock, but not the global financial crisis, a financial/banking sector shock.

This study contributes to the financial crisis and auditing literatures by examining whether exogenous shocks exacerbate the self-fulfilling prophecy effect. The present analysis and findings have implications for future academic research related to systemic shocks and for auditors in documenting the inducement effect arising from the issuance of GCMs during crisis periods.

This study aims to explore the evolutionary trajectory of American corporations and their governance over the past few centuries, using a multidisciplinary investigative approach. The research focuses on the American business landscape because it has played a pivotal role in shaping the field of corporate governance theory and practice.

The author thoroughly investigates archival records, legal documents, academic publications, reputable databases and pertinent literature to unearth valuable insights into the key events that have influenced the evolutionary path of American corporations and their governance throughout history.

Delving into the evolutionary journey of American corporations and their governance reveals a multifaceted narrative, enhancing our comprehension of the impact of the external socio-economic environment, and the effectiveness and limitations of established corporate governance paradigms in addressing such transformations. This introspection establishes the groundwork for ongoing discussions concerning how corporate governance should adapt to meet the evolving needs and expectations of stakeholders and society as a whole, with a specific focus on the pivotal role that boardrooms could play in this regard.

The insights gained from this analysis offer practitioners a foundational resource to understand corporate governance in a complex business landscape. Armed with this understanding, practitioners can better align governance strategies with both historical context and contemporary requirements.

The research has significant social implications in the sense that history highlights the importance of the society in influencing corporate governance practices. It specifically emphasizes the need for the board of directors to consider both shareholder value and social responsibility, while also fostering public trust and confidence.

Many corporate governance concepts are often used with limited understanding of their initial intent, resulting in their unquestioned adoption. In this paper, the author offers a contextual exploration of historical events that have contributed to the development of these diverse corporate perspectives. To the best of the author’s knowledge, there are exceedingly few, if any, papers that present comparably insightful and multidisciplinary insights into the evolutionary path of corporations and their governance, especially within a dynamic and influential market like that of the USA.

The Accounting Information Systems (AIS) research field emerged around 30 years ago as a subfield of accounting but is at risk to develop further as an isolated discipline. However, given the importance of digitalization and its relevance for accounting, an amalgamation of the parent research field of accounting and the subfield of accounting information systems is pivotal for continuing relevant research that is of high quality. This study empirically investigates the distance between AIS research that is included in accounting literature and AIS research that prevails in dedicated AIS research outlets.

To understand which topics define AIS research, all articles published in the two leading AIS journals since 2000 were analyzed. Based on this topical inventory, all AIS studies that were published in the top 16 accounting journals, also since 2000, are identified and categorized in terms of topic, subtopic and research methodology. Next, AIS studies published in the general accounting field and AIS studies published in the AIS field were compared in terms of topics and research methodology to gain insights into the distance between the two fields.

The coverage of AIS topics in accounting journals is, to no small extent, concentrated around the topics “information disclosure”, “network technologies” and “audit and control”. Other AIS topics remain underrepresented. A possible explanation might be the focus on archival studies in accounting outlets, but other elements might play a role. The findings suggest that there is only a partial overlap between the parent accounting research field and the AIS subfield, in terms of both topic and research methodology diversity. These findings suggest a considerable distance between both fields, which might hold detrimental consequences in the long run, if no corrective actions are taken.

This is the first in-depth investigation of the distance between the AIS research field and its parent field of accounting. This study helped develop an AIS classification scheme, which can be used in other research endeavors. This study creates awareness of the divergence between the general accounting research field and the AIS subfield. Given the latter's relevance to the accounting profession, isolation or deterioration of the AIS research must be avoided. Some actionable suggestions are provided in the paper.

In recent years, mandatory rules and regulations were issued to stress the importance of increasing gender diversity in companies, assuming that gender diversity would enhance financial performance. Thus, the purpose of this paper is to review recent research concerning board gender diversity and its impact on financial performance for the period of 2002 to 2022.

Using the Web of Science and Scopus databases, 152 studies were analyzed, out of 91 high-impact journals. The analysis focuses on discussing the moderating, mediating and controlling variables and exploring the theories and theoretical foundations that are most prevalent in the literature.

The findings indicated an incompatibility between the results of the studies on the impact of gender diversity on financial performance. In addition, results showed the majority of studies focused on discussing the controlling variables associated with the company compared to the variables related to employees or the surrounding environment. On the other hand, the results also showed widespread use of the theoretical basis with the development of new theories in the recent period in parallel with the increase in the literature.

The results of this study help to reconcile the findings of the different and conflicting literature by presenting the perception that the efficacy of the positive impact of gender diversity on financial performance is related to several organizational and environmental factors that companies have to consider.

This paper aims to first investigate auditor change following mismatch by focusing on the number of times mismatch occurred prior to auditor change and on clients mismatched continuously with auditors for two or more years. Subsequently, it studies the relation of mismatch in the current year with auditor change for clients mismatched in the past year. These issues are important because of the call for regulatory intervention in auditor selection. If market forces achieve improvement in matching, then those forces should be relied upon in auditor selection.

This paper adapts the literature to estimate mismatch and uses logistic regressions on an auditor change model to study the timing of auditor change by mismatched clients and on a mismatch model to examine improvement in matching following auditor change.

This paper finds that the more frequent mismatches occurred in the past four years, the higher the likelihood of switching in the current year. Clients mismatched continuously for two or more years are more likely to change auditors. This paper also reports that mismatched clients who switch auditors are less likely to be mismatched again after the switch.

Because market forces reduce mismatch through auditor change, free choice by clients and auditors should be allowed, and regulatory intervention should be introduced cautiously. As investors and other users of financial statements have an interest in seeing that clients get the appropriate auditors for the audit, they will be assured that market forces could achieve the purpose. Thus, the results of this paper address public concern in the regulatory regime and support current audit market practices.

Prior studies assume a one-year time frame for auditor change to follow mismatch. This paper relaxes this assumption, to better reflect audit market practices, by showing that clients who are more often mismatched with auditors or those mismatched continuously for two or more years could also change auditors. Furthermore, prior studies find that mismatching motivates auditor change, but they do not show that matching improves after the change. This paper extends the literature by shedding new light to show that auditor change improves auditor–client matching.