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Open Access
Article
Publication date: 10 August 2023

Ahmed Anis

This paper aims to examine the role of Blockchain in the accounting and auditing literature and profession. Specifically, the paper investigates auditors' perceptions about the…

3818

Abstract

Purpose

This paper aims to examine the role of Blockchain in the accounting and auditing literature and profession. Specifically, the paper investigates auditors' perceptions about the role of blockchain in accounting and auditing and the perceived potential benefits and challenges of blockchain-based accounting systems in Egypt. Moreover, what are the capabilities required for successfully implementing blockchain-based accounting systems?

Design/methodology/approach

A mixed-method approach was adopted to achieve the research objectives. The qualitative study included 11 in-depth interviews with external auditors, and the results of the interviews and the literature review helped develop a survey collected from 58 auditors.

Findings

The findings revealed low-to-moderate awareness of Blockchain-based accounting systems. Also, there were significant differences between auditors from large audit firms and small-and-medium audit firms regarding the benefits and challenges associated with Blockchain-based accounting systems.

Practical implications

The results provide valuable insights for practitioners, researchers and policymakers.

Originality/value

Understanding blockchain-based accounting systems and the benefits and challenges associated with their application is crucial for developing effective strategies and frameworks to overcome barriers and realize the transformative potential of blockchain in the accounting and audit market.

Details

Journal of Humanities and Applied Social Sciences, vol. 5 no. 4
Type: Research Article
ISSN: 2632-279X

Keywords

Open Access
Article
Publication date: 7 November 2023

Deepak Verma, Varun Dawar and Pankaj Chaudhary

The present study's goal is to analyze the impact of audit quality (AQ) on earnings quality (EQ) using different audit attributes. The study shows empirical evidence from India…

1370

Abstract

Purpose

The present study's goal is to analyze the impact of audit quality (AQ) on earnings quality (EQ) using different audit attributes. The study shows empirical evidence from India, considered an emerging market.

Design/methodology/approach

The sample selected represents the 376 non-financial firms listed on the Bombay Stock Exchange (BSE). With a 20-year time frame, the authors used the absolute value of discretionary accruals (McNichols, 2002) (DA) as a proxy for EM, which is inversely related to EQ. The authors analyzed data using OLS, fixed effect (FE), 2SLS and Panel-IV estimators.

Findings

The authors found that most audit attributes positively affect EQ. In the Indian context, joint auditor (JA), auditor size (A_SIZE), auditor fee (A_FEE) and auditor tenure (A_TENURE) have a negative association with EM indicating high EQ. In contrast, auditor rotation (A_ROTATON) positively affects EM confirming low EQ.

Research limitations/implications

The present study uses Big-4 and its member firms as a proxy of auditor size (A_SIZE); instead, other bases may be taken for it, like the dominant audit firms in a particular industry in sample data, etc. The authors have started audit tenure from the base year, i.e. 2001, which may ignore the association of auditor and auditee just before 2001.

Practical implications

The study findings would enhance policymakers' willingness to prepare appropriate regulations regarding JAs and auditor rotation, which might improve financial market efficiency and reduce financial fraud among Indian corporates.

Originality/value

To the best of the authors' knowledge, this is the first study to incorporate “Joint Auditor” (JA) as a proxy for audit quality in the Indian context, which might significantly contribute to the literature.

Details

Asian Journal of Accounting Research, vol. 9 no. 1
Type: Research Article
ISSN: 2459-9700

Keywords

Open Access
Article
Publication date: 4 September 2019

Filmiar Yunida Nawangsari and Iswajuni Iswajuni

The purpose of this paper is to examine the effects of simultaneous and partial auditor switching toward the abnormal return of manufacturing companies listed in Indonesia Stock…

5072

Abstract

Purpose

The purpose of this paper is to examine the effects of simultaneous and partial auditor switching toward the abnormal return of manufacturing companies listed in Indonesia Stock Exchange between 2009 and 2012.

Design/methodology/approach

Auditor switching is divided into some types: lateral Big 4 to Big 4 (B4B4), lateral non Big 4 to non Big 4 (NB4NB4), cross-up (CU) and cross-down. The abnormal return is measured with a market-adjusted model. In this study, company size is used as the control variable and is measured using the natural logarithm of the total assets (LnTA) and return on equity. Multiple linear regression is used for analysis with significant value a= 5 percent. The hypotheses were tested using f-test and t-test.

Findings

The result shows that simultaneous auditor switchings affect the abnormal return. In partial auditor switching, only CU switch has effects on the abnormal return.

Originality/value

This study provides additional literature on the effect of auditor switching, especially on an abnormal return.

Details

Asian Journal of Accounting Research, vol. 4 no. 1
Type: Research Article
ISSN: 2443-4175

Keywords

Open Access
Article
Publication date: 4 December 2017

Azam Eshagniya and Mahdi Salehi

This paper aims to examine the effect of financial restatement on changing the auditor in the following years.

5206

Abstract

Purpose

This paper aims to examine the effect of financial restatement on changing the auditor in the following years.

Design/methodology/approach

The study uses data of 105 companies (735 company-years) listed on the Tehran Stock Exchange collected during the period 2008-2014. Logistic regression is used to test the hypotheses.

Findings

The results of hypotheses present that restatement does not cause auditor changes and that as the severity of a restatement increases, the auditor change in the following year of restatement also does not increase. Restating companies having strong governance do not go for auditor changes as compared with other companies. In addition, in companies that are restating, non-big auditor changes are not more likely than a big auditor. Also, in companies restating simultaneous with a CEO turnover, there is no possibility of auditor change. Furthermore, multinomial logistic regression showed that the adjustments resulting from the correction of errors and changes in procedures and the amount of adjustments do not cause auditor change in the following year. So, the results have shown that the restatement is not an important factor in changing auditor the next year.

Originality/value

The current study analyses the impact of financial restatement on auditor changes in a deep manner in a developing country like Iran.

Details

Asia Pacific Journal of Innovation and Entrepreneurship, vol. 11 no. 3
Type: Research Article
ISSN: 2071-1395

Keywords

Open Access
Article
Publication date: 4 December 2020

Thomas Averio

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…

11592

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.

Details

Asian Journal of Accounting Research, vol. 6 no. 2
Type: Research Article
ISSN: 2443-4175

Keywords

Open Access
Article
Publication date: 10 July 2017

Guy D. Fernando and Alex Thevaranjan

This paper aims to study the impact of audit quality on the components of executive cash compensation. It is predicted that as audit quality improves, greater emphasis will be…

4443

Abstract

Purpose

This paper aims to study the impact of audit quality on the components of executive cash compensation. It is predicted that as audit quality improves, greater emphasis will be placed on the incentive components of cash compensation, and lower emphasis on the salary (fixed) component. Specifically, it is predicted that as audit quality enhances, greater emphasis will be placed on earnings and sales revenues in determining executive cash compensation. Using auditor specialization as a proxy for audit quality, empirical support is provided for all of our predictions.

Design/methodology/approach

This paper provides empirical support with agency theoretic predictions.

Findings

This paper developed the following hypotheses: H1 – in executive cash compensation, more weight is being placed on earnings-based measures as auditor specialization improves; H2 – in executive cash compensation, more weight is also being placed on sales revenues as auditor specialization improves; H3 – in executive cash compensation, salary levels decrease as auditor specialization improves; and H4 – the impact of auditor specialization on the weight on earnings, sales and the salary levels is lower in the post-Sarbanes–Oxley Act (SOX) period compared to pre-SOX period.

Research limitations/implications

First, the article limits itself to cash compensation, while current executive compensation is largely made of equity. Second, the measure of audit quality used, ‘national level auditor specialization’, may not be as effective in the post-SOX era.

Practical implications

Compensation committees should pay attention to audit quality (in whatever way it may be proxied by) in determining executive compensation.

Originality/value

This is the first paper to show that audit quality not only improves the earnings response coefficient in firm valuation but also enhances the weight placed on earnings (and sales revenues) in executive compensation.

Details

Journal of Centrum Cathedra, vol. 10 no. 1
Type: Research Article
ISSN: 1851-6599

Keywords

Open Access
Article
Publication date: 14 December 2022

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…

2018

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.

Details

Arab Gulf Journal of Scientific Research, vol. 41 no. 2
Type: Research Article
ISSN: 1985-9899

Keywords

Open Access
Article
Publication date: 5 December 2023

Carlotta Magri and Pier Luigi Marchini

This study aims to investigate the link between audit quality and in-court debt restructuring. The aim is to understand whether the confirmation of debt restructuring plans is…

Abstract

Purpose

This study aims to investigate the link between audit quality and in-court debt restructuring. The aim is to understand whether the confirmation of debt restructuring plans is affected by audit quality, which, in the light of agency theory, reduces information asymmetries between outsiders (creditors and the court) and insiders (shareholders and managers) of the debtor company.

Design/methodology/approach

A logistic regression is performed to test whether higher audit quality is associated with an increased probability of successfully completing a debt restructuring proceeding (RP). Consistent with the literature, audit quality is assessed ex ante based on auditor size, which is used as a proxy for independence. The analysis considers private Italian companies.

Findings

Audit quality positively affects debt restructuring. Among financially distressed companies, those audited by an audit company are more likely to succeed in RPs than those audited by a single practitioner. There is no evidence of a Big N effect.

Originality/value

This study fills a gap in literature as, in contrast to other financial and governance characteristics, audit quality has never been studied before as a determinant of efficient restructuring. It contributes to the literature on auditing and governance by highlighting the importance of audit quality in complex situations such as RPs, and it expands on debt restructuring literature by considering the importance of the information exchanged during RPs.

Details

Managerial Auditing Journal, vol. 39 no. 1
Type: Research Article
ISSN: 0268-6902

Keywords

Open Access
Article
Publication date: 19 July 2022

Afsaneh Soroushyar

This study examines whether and how a client's business strategy can affect the relationship between auditor characteristics and financial reporting quality.

4017

Abstract

Purpose

This study examines whether and how a client's business strategy can affect the relationship between auditor characteristics and financial reporting quality.

Design/methodology/approach

In this study, auditor industry specialization and tenure were used as proxies for auditor characteristics. The client business strategy was measured using the resource allocation index method. Finally, discretionary accruals are used to assess financial reporting quality. This study includes 1,450 firm-year observations and 145 companies listed on the Tehran Stock Exchange (TSE) over a ten-year period from 2011 to 2020. The research hypotheses were analyzed using a multivariate regression model and panel data.

Findings

The results show that auditor industry specialization increases financial reporting quality. This relationship improves when the client's business strategy deviates from the industry–normal strategy. The research findings state that auditor tenure has a positive association with financial reporting quality, and this relationship is strengthened when the company's business strategy deviates from the normal industry strategy.

Practical implications

The findings of this study provide important evidence for investors, firm management, and auditing firms. Investors must consider the auditor characteristics when selecting companies listed on the TSE. Managers of Iranian companies are advised to consider the auditor's characteristics when choosing an audit firm to increase financial reporting quality. Audit firms should evaluate their business strategies in audit planning to increase the quality of financial reporting.

Originality/value

To the best of the authors’ knowledge, this is the first empirical study to examine the relationship between auditor characteristics and the financial reporting quality in the emerging capital market by considering the clients' business strategy.

Details

Asian Journal of Accounting Research, vol. 8 no. 1
Type: Research Article
ISSN: 2443-4175

Keywords

Open Access
Article
Publication date: 28 July 2022

Tatiana Mazza, Stefano Azzali and Andrey Simonov

This study aims to examine whether national industry expertise in Italy is more dominant than local expertise. Prior studies from Australia, USA and UK show that audit fees for…

1230

Abstract

Purpose

This study aims to examine whether national industry expertise in Italy is more dominant than local expertise. Prior studies from Australia, USA and UK show that audit fees for industry experts are priced at a higher premium at the local level than the national level. These countries have voluntary audit firm rotation, while Italy has mandatory audit firm rotation (MAFR). The authors predict that Italy has a stronger national than local level of industry expertise, to better retain and transfer industry expertise.

Design/methodology/approach

The authors compare audit fee premiums of national industry experts to local levels, using quantitative (multivariate tests) and qualitative (interviews) methodology.

Findings

Using hand-collected audit fees, the authors find that the audit fee premium for industry expertise is greater at the national level than the local level. The authors find corroborating results with audit hours. To provide further support, the authors conduct analysis for a neighboring country that does not have audit firm rotation. Using hand-collected data from Germany, the authors find that audit fee premiums from national industry expertise are no different from local industry expertise.

Originality/value

The present study study has theoretical and practical implications, for European Union countries, which recently adopted MAFR and for countries considering adoption in the future.

Details

Managerial Auditing Journal, vol. 38 no. 2
Type: Research Article
ISSN: 0268-6902

Keywords

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