Does explanatory language convey the auditor’s perceived audit risk? A study using a novel big data analysis metric

IF 2.8 3区 管理学 Q2 BUSINESS, FINANCE
S. Choi, H. Na, Kun Chang Lee
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引用次数: 1

Abstract

Purpose The purpose of this study is to examine the relationship between explanatory language, audit fees and audit hours to demonstrate that auditors use explanatory language in audit reports to explain perceived audit risk. Design/methodology/approach The authors construct the sentiment value, a novel audit risk proxy derived from audit reports, using big data analysis. The relationship between sentiment value and explanatory language is then investigated. The authors present the validity of their new metric by examining the relationship between sentiment value and accounting quality, taking audit fees and hours into account. Findings The authors first find that reporting explanatory language is positively related to audit fees. More importantly, the authors provide an evidence that explanatory language in audit reports is indicative of increased audit risk as it is negatively correlated with sentiment value. As a positive (negative) sentimental value means that the audit risk is low (high), the results indicate that auditors describe explanatory language in a negative manner to convey the inherent audit risk and receive higher audit fees from the risky clients. Furthermore, the relationship is strengthened when the explanatory language is more severe, such as reporting the multiple numbers of explanatory language or going-concern opinion. Finally, the sentiment value is correlated with accounting quality, as measured by the absolute value of discretionary accruals. Originality/value Contrary to previous research, the authors’ findings suggest that auditors disclose audit risks of client firms by including explanatory language in audit reports. In addition, the authors demonstrate that their new metric effectively identifies the audit risk outlined qualitatively in audit report. To the best of the authors’ knowledge, this is the first study that establishes a connection between sentiment analysis and audit-related textual data.
解释性语言是否传达了审计师感知的审计风险?使用一种新的大数据分析度量的研究
目的本研究的目的是检验解释性语言、审计费用和审计时间之间的关系,以证明审计师在审计报告中使用解释性语言来解释感知的审计风险。设计/方法论/方法作者利用大数据分析构建了情感值,这是一种从审计报告中衍生出来的新型审计风险代理。然后研究了情感价值与解释语言之间的关系。作者通过考察情感价值与会计质量之间的关系,将审计费用和工作时间考虑在内,展示了他们新指标的有效性。研究结果作者首先发现,报告解释性语言与审计费用呈正相关。更重要的是,作者提供了一个证据,证明审计报告中的解释性语言表明审计风险增加,因为它与情绪值呈负相关。由于正(负)情感价值意味着审计风险低(高),研究结果表明,审计师以消极的方式描述解释性语言,以传达固有的审计风险,并从风险客户那里获得更高的审计费用。此外,当解释性语言更严厉时,这种关系会得到加强,例如报告解释性语言的多个数字或持续经营意见。最后,情感价值与会计质量相关,以可自由支配应计项目的绝对值来衡量。原创性/价值与以往的研究相反,作者的研究结果表明,审计师通过在审计报告中加入解释性语言来披露客户公司的审计风险。此外,作者证明了他们的新指标有效地识别了审计报告中定性概述的审计风险。据作者所知,这是第一项在情感分析和审计相关文本数据之间建立联系的研究。
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来源期刊
CiteScore
5.40
自引率
13.80%
发文量
45
期刊介绍: The key areas addressed are: ■Audit and Assurance (financial and non-financial) ■Financial and Managerial Reporting ■Governance, controls, risks and ethics ■Organizational issues including firm cultures, performance and development In addition, the evaluation of changes occurring in the auditing profession, as well as the broader fields of accounting and assurance, are also explored. Debates concerning organizational performance and professional competence are also covered.
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