Managerial Auditing Journal最新文献

{"title":"Audit quality and COVID-19 restrictions","authors":"Sabrina Gong, Nam Ho, J. Jin, K. Kanagaretnam","doi":"10.1108/maj-11-2021-3383","DOIUrl":"https://doi.org/10.1108/maj-11-2021-3383","url":null,"abstract":"\u0000Purpose\u0000This study aims to examine declines in audit quality after the COVID-19 travel restrictions/stay-at-home orders were issued in the USA in early 2020.\u0000\u0000\u0000Design/methodology/approach\u0000Taking advantage of variation in the dates of stay-at-home orders issued by different US states, this study identifies engagements that were significantly affected by the lock down orders.\u0000\u0000\u0000Findings\u0000The results suggest that engagements affected by the restrictions produced lower audit quality, as measured through restatements and discretionary accruals, relative to those completed before COVID-19 travel restrictions/stay-at-home orders. Further analysis reveals that this decrease in audit quality was attributable to firms with high inventory relative to assets, high R&D expenses relative to assets and non-Big 4 auditors.\u0000\u0000\u0000Practical implications\u0000This study finds that the restrictions on physical and on-site interaction caused auditors to universally struggle with resource/judgment-intensive accounts such as inventory and R&D expenditures. The results suggest that while Big 4 auditors managed to maintain their status quo level of audit quality following COVID-19 restrictions, non-Big 4 auditors were unable to overcome the challenges of an online work environment and their audit quality declined.\u0000\u0000\u0000Originality/value\u0000To the best of the authors’ knowledge, this paper is the first to empirically examine changes in audit quality as a response to a substantial change in auditors’ working environment due to the global health crisis. As work-from-home becomes more prevalent in audit firms, the results suggest that, on average, this move does diminish audit quality.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-06-22","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46227241","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Narrative forward-looking information disclosure, do ownership concentration, boardroom gender diversity and cultural values matter? A cross country study","authors":"Maysa Ali Mohamed Abdallah, Nayera Adeldayem Eltamboly","doi":"10.1108/maj-12-2021-3402","DOIUrl":"https://doi.org/10.1108/maj-12-2021-3402","url":null,"abstract":"\u0000Purpose\u0000This study aims to identify the main factors that drive the differences in the levels of forward-looking information disclosure (FLID) across four countries. This study goes beyond the firm-specific characteristics to the countries-specific factors to explain the observable differences in the level of FLID among the UK, Italian, Hong Kong and Chinese American Depositary Receipts (ADRs) firms trading in US Exchanges.\u0000\u0000\u0000Design/methodology/approach\u0000To validate the levels of FLID, corporate financial information environment (CFIE)-final reports structure extractor (FRSE) was conducted on the annual reports of a sample of 353 listed firm observations in 2020 across four different countries. Also, the ordinary least square regression model was used to examine the proposed relationships.\u0000\u0000\u0000Findings\u0000The empirical results indicate that the level of FLID is highest among the Chinese ADRs firms trading in US Exchanges and UK listed firms. Also, ownership concentration and gender diversity have a positive correlation with the level of FLID. Additionally, long-term orientation positively influences the level of FLID. Considering the moderation effect of power distance and masculinity dimensions, countries with larger power distance tend to have a lower impact of ownership concentration on the level of FLID, whereas countries with higher masculinity tend to have a lesser positive relationship between gender diversity and the level of FLID.\u0000\u0000\u0000Originality/value\u0000Notwithstanding, this study provides novel and persuasive evidence regarding the effects of firm- and country-specific characteristics as possible determinants of forward-looking disclosures, drawing on evidence from international companies with free floats, boards with female quotas and cultural values including masculinity and long-term orientation. This work offers unique insights from the upper echelons lens, which implies that firms need to obtain a critical mass of gender diversity to achieve a more balanced forward-looking perspective on their annual reports.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-06-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45074865","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"CEO turnover and audit pricing: the role of media tone","authors":"C. Chao","doi":"10.1108/maj-03-2021-3061","DOIUrl":"https://doi.org/10.1108/maj-03-2021-3061","url":null,"abstract":"\u0000Purpose\u0000Prior research documents that chief executive officer (CEO) characteristics and succession planning affect audit fees. However, whether new CEOs’ media coverage influences audit fees remains unexplored. This study aims to fill this gap by examining whether auditors price media coverage of the new CEO.\u0000\u0000\u0000Design/methodology/approach\u0000The sample comprises 89 US listed firms with CEO turnover over the period 2012–2016, resulting in a total of 445 firm-year observations. Panel data models are used in the analyses.\u0000\u0000\u0000Findings\u0000The results show that audit fees are higher for firms that hire a new CEO covered with more negative media tone. This study further documents that CEO media tone is determined independently of audit pricing, but that the extent of audit fees is positively related to a new CEO covered with more negative media tone, consistent with a sequential media-tone-then-audit-pricing process.\u0000\u0000\u0000Research limitations/implications\u0000The results of this study should motivate future auditing research to consider the media as an important source of external information. The findings are also relevant to stakeholders who are interested in understanding the relationship between auditors and their clients’ CEOs.\u0000\u0000\u0000Originality/value\u0000This study contributes to the audit fee literature by providing new evidence that auditors view their clients’ CEO with a negative media tone as requiring greater audit effort and leading to higher risks, due to greater public and regulators’ attention conveyed in news coverage. Moreover, the finding of this study that audit fees are higher for firms that hire a new CEO covered with more negative media tone is novel, and extends Joe’s (2003) empirical finding that negative press coverage increases auditors’ perception of risk.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-06-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46551759","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Key audit matters and debt contracting: evidence from China","authors":"Hui Liu, Jiaqi Ning, Yue Zhang, Junrui Zhang","doi":"10.1108/maj-06-2021-3210","DOIUrl":"https://doi.org/10.1108/maj-06-2021-3210","url":null,"abstract":"\u0000Purpose\u0000In an effort to make audit reports more informative to users, the Public Company Accounting Oversight Board and the International Auditing and Assurance Standards Board adopted a standard that requires auditors to disclose key audit matters (KAMs). This paper aims to explore the impact of the risk information provided by KAMs on corporate debt contracting.\u0000\u0000\u0000Design/methodology/approach\u0000In China, the KAM standard went into effect for A + H cross-listing companies in 2017 and became mandatory for all listed companies in 2018. This study takes this as an exogenous shock to examine the impact of the KAM disclosures on debt contracting. This study also designs a path analysis to open the “black box” between the risk information in KAMs and the risk perception of creditors. Moreover, This study conducts a textual analysis on the KAMs information based on samples after the release of the KAM standard.\u0000\u0000\u0000Findings\u0000This study conducts difference-in-difference tests and find that the KAM disclosures decrease interest rates and increase the proportion of long-term debt. Path analyses reveal that the KAM disclosures lead to more favorable debt characteristics through decreasing information asymmetry. This study also finds that the more KAMs are disclosed, the more favorable debt characteristics are and that different categories of KAMs have different effects on debt contracting.\u0000\u0000\u0000Originality/value\u0000This paper highlights the benefits of KAM disclosures, which are consistent with the convergence argument of risk information disclosures. Investors’ reactions to KAMs are mixed because of the differences in how professional investors and nonprofessional investors interpret information. This study provides evidence of incrementally informative nature of KAMs from the perspective of debt holders, who are professional information users.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-06-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44856543","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Audit demand and monitoring mechanisms: evidence from SEC comment letters and short sellers","authors":"Justyna Skomra, Pervaiz Alam, Piotr Antoni Skomra","doi":"10.1108/maj-09-2020-2836","DOIUrl":"https://doi.org/10.1108/maj-09-2020-2836","url":null,"abstract":"\u0000Purpose\u0000The paper aims to explore the impact of two types of monitoring mechanisms, namely, Securities and Exchange Commission (SEC) comment letters (CLs) and short sellers, on management’s demand for audit quality.\u0000\u0000\u0000Design/methodology/approach\u0000Using information on the short interest positions and a panel data of SEC CLs between 2005 and 2015, this study applies logit regression model to estimate the likelihood of hiring Big 4 and industry expert audit firm. This study also applies an ordinary least squares regression technique to estimate audit fees.\u0000\u0000\u0000Findings\u0000Consistent with disclosure and agency theories, results from empirical analyses provide that management demands higher quality audits measured by higher audit fees, and higher likelihood to hire Big 4 and industry expert audit firm. However, this study finds that the effect varies depending on the specific monitoring mechanisms. Additionally, when both monitoring mechanisms are in place, the SEC CLs drive the overall direction of the demand for audit quality when audit demand is captured by propensity to hire Big 4/industry expert audit firm.\u0000\u0000\u0000Research limitations/implications\u0000This study provides researchers with enhanced understanding of the factors having effect on the demand side for audit quality. Furthermore, it adds to the stream of literature on economic consequences of SEC CLs and short selling.\u0000\u0000\u0000Originality/value\u0000To the best of authors’ knowledge, this is the first comprehensive study to document the effect of two types of monitoring mechanisms, namely, SEC CLs and short selling, on the demand for audit quality.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-05-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42590624","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"An empirical evaluation of future auditors in the U.S.A. and India using the trifurcated dimensions of trait professional skepticism","authors":"Gabe Dickey, R. Bell, Sri Beldona","doi":"10.1108/maj-09-2021-3309","DOIUrl":"https://doi.org/10.1108/maj-09-2021-3309","url":null,"abstract":"\u0000Purpose\u0000Understanding the factors that impact the audit quality of work performed by affiliated offshore entities has become imperative for US accounting firms. The purpose of this paper is to gain a better understanding of the role that cultural differences have on the trait professional skepticism mindset of future auditors in the USA and India.\u0000\u0000\u0000Design/methodology/approach\u0000The authors use the Hurtt (2010) Professional Skepticism Scale (HPSS) to evaluate the role that culture has on the trait professional skepticism mindset of a sample of future auditors in the USA and India.\u0000\u0000\u0000Findings\u0000The authors identify three distinct dimensions of trait professional skepticism embedded in the HPSS. The research finds no significant differences between USA and Indian auditing students on the evidential “trust but verify” dimension of trait professional skepticism; however, US students score higher on the behavioral “presumptive doubt” and self-reliance dimensions.\u0000\u0000\u0000Practical implications\u0000Given culture significantly influences trait professional skepticism, firms and regulators should be highly cognizant of the type of work that is being sent offshore. Firms using affiliated offshore entities should also ensure that robust integration practices are used to facilitate the level of professional skepticism necessary to perform a quality audit.\u0000\u0000\u0000Originality/value\u0000By identifying three separate dimensions in the HPSS, the research takes an important step in understanding the factors that impact the quality of audit procedures performed in a critical affiliated offshore entity for US-based accounting firms.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-05-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47439825","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Confucianism and auditor changes: evidence from China","authors":"Chengang Ye, Yanyan Wang, Yongmin Wu, Ming Jiang, Yasir Shahab, Yang-Kai Lu","doi":"10.1108/maj-06-2021-3184","DOIUrl":"https://doi.org/10.1108/maj-06-2021-3184","url":null,"abstract":"\u0000Purpose\u0000The purpose of this study is to examine the impact of Confucianism on auditor changes by highlighting the role of the cultural embeddedness mechanism in audit contracts from the perspective of credit governance.\u0000\u0000\u0000Design/methodology/approach\u0000Using a unique sample of Chinese A-share listed firms from 2008 to 2018, this study uses logit regression as the baseline methodology while controlling for macro-level factors and firm-level characteristics, as well as industry and year fixed effects. This study also conducts different mediation/channel analyses, endogeneity tests (using two-stage least squares and difference-in-differences techniques) and robustness checks.\u0000\u0000\u0000Findings\u0000The findings show that the embeddedness of Confucianism in a corporation reduces auditor changes. Furthermore, the channel analyses (using moral self-discipline, social trust, professional ethics and the quality of accounting information as four potential channels) reveal that Confucianism can improve moral credit and consolidate the cultural foundation of credit governance. Specifically, the stronger the embeddedness of Confucianism, the more stable the auditing contract. Finally, Confucianism in formal and informal systems can be mutually substituted.\u0000\u0000\u0000Originality/value\u0000There is limited research on how culture affects auditing contracts. This study offers new contributions and extends the literature on the connection between cultural embeddedness and contract stability. Confucianism has the potential to strengthen the efficiency of credit governance and maintain the stability of contracts. This study offers a thoughtful orientation toward duly using Confucianism vis-à-vis credit governance.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-05-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"49589442","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"The effect of individual auditor quality on audit outcomes: opening the black box of audit quality","authors":"D. Stice, Han Stice, Roger M. White","doi":"10.1108/maj-07-2021-3235","DOIUrl":"https://doi.org/10.1108/maj-07-2021-3235","url":null,"abstract":"\u0000Purpose\u0000This study aims to examine the effect of individual auditor quality (below the partner level) on overall audit quality.\u0000\u0000\u0000Design/methodology/approach\u0000We aggregate audit employee-level individual performance evaluations to create a measure of auditor quality at the office level.\u0000\u0000\u0000Findings\u0000We find that high-quality audit offices are associated with a lower likelihood of client restatement, fewer client abnormal accruals and a higher likelihood of a client receiving a going concern opinion. We partition employees into low, medium and high level, based on job title, to investigate which employee levels drive these results. We find that the restatement results are driven by high quality high-level employees (Senior Managers/Directors), whereas the going concern results are driven by high quality low-level employees (Seniors). Furthermore, we find evidence that high-quality audit teams are associated with all aspects of audit quality and the magnitude of these team effects are much larger than those of the effects for any individual employee type.\u0000\u0000\u0000Originality/value\u0000Our findings are consistent with higher-level auditors preventing the most serious financial statement deficiencies, low-level employees contributing to audit firm independence and overall team quality creating synergy which has the strongest effect on all aspects of audit quality. These insights based on individual auditor evaluations are new to the literature. Overall, our empirical results suggest that individual auditor quality is associated with higher quality audits and that employees at all levels affect audit outcomes.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-05-11","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42992173","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Impact of COVID-19 pandemic on auditors’ responsibility: evidence from European listed companies on key audit matters","authors":"Camelia-Daniela Hategan,Ruxandra-Ioana Pitorac,Andreea Claudia Crucean","doi":"10.1108/maj-07-2021-3261","DOIUrl":"https://doi.org/10.1108/maj-07-2021-3261","url":null,"abstract":"PurposeThis research seeks to assess the impact of the COVID-19 pandemic on the quality of financial reporting and the auditor's responsibility. This paper aims to investigate how the auditors identified the impact of COVID-19 on the companies' annual financial statements and considered this impact as a key audit matters (KAM) in the reports issued and the factors that influenced their reporting.Design/methodology/approachThe empirical research consists of a qualitative analysis of KAMs and a quantitative one based on a panel data econometric model using a random effects maximum likelihood regression. The sample includes companies listed on the primary market on European stock exchanges in 2019–2020.FindingsThe results suggest a direct positive correlation between numbers of KAMs and the auditor's size, frequency of the event and going concern uncertainty. Two of the variables were not validated: auditor rotation and audit fees.Research limitations/implicationsThe limitation of research can be the sample structure, and the model we proposed does not take into account all possible influencing factors.Practical implicationsThis study will help researchers, policymakers and business owners have a deeper understanding of auditors' responsibility in their work. As practical implications of the COVID-19 impact following the implementation of telework, audit firms have begun to invest in digital programs to assist them in their teamwork and communication with clients. One impact on regulators has been to relax reporting requirements by extending deadlines.Originality/valueThis research contributes to the academic literature by providing a synthesis and econometric model of the effects identified by auditors, following the COVID-19 pandemic, expressed by KAMs in their reports.","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":"192 1","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-04-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"138515763","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}

{"title":"Judicial hellholes and other differential characteristics: is state-level legal risk reflected in audit fee pricing?","authors":"James C. Hansen, S. Murray, S. H. Park, NaRi Shin","doi":"10.1108/maj-11-2020-2917","DOIUrl":"https://doi.org/10.1108/maj-11-2020-2917","url":null,"abstract":"\u0000Purpose\u0000This study aims to examine the effect of state-level legal risk on audit fee pricing in the USA. This study hypothesizes that auditors are more likely to charge higher audit fees to clients headquartered in states with higher legal risk in terms of probability of being sued, expected size of damages allocated to the auditors and breadth of third parties able to claim damages.\u0000\u0000\u0000Design/methodology/approach\u0000This study hypothesizes that higher state-level legal risk leads to higher audit fees. To test this, this study estimates ordinary least squares regressions of audit fees for 56,576 company years from 2001 to 2018 with the three measures of state legal risk and other factors known to affect audit fees.\u0000\u0000\u0000Findings\u0000This study finds that state-level legal risk is positively associated with audit fee pricing for two of three measures. Interestingly, the third measure, breadth of third parties able to claim damages, is negatively associated with audit fees.\u0000\u0000\u0000Originality/value\u0000To the best of the authors’ knowledge, this paper fulfills an identified need and is the first study to comprehensively test the association between state-level differentials in legal risk and audit fees.\u0000","PeriodicalId":47823,"journal":{"name":"Managerial Auditing Journal","volume":" ","pages":""},"PeriodicalIF":2.9,"publicationDate":"2022-04-12","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"46045616","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":3,"RegionCategory":"管理学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}