Audit Office's unused capacity and audit quality

Yu, Chun-Chan; Huang, Hua‐Wei

doi:10.1016/j.apmrv.2022.07.005

Cited by 7 publications

(6 citation statements)

References 49 publications

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“…This study adopts accrual-earnings management (ABS_DA) (Yu and Huang, 2022; Rosati et al , 2022; Hendijani Zadeh, 2022; Cheng et al , 2021; Huang et al , 2016; Gul et al , 2013; Francis and Yu, 2009; Sun et al , 2020) and small profits (SP) (Yu and Huang, 2022; Rosati et al , 2022; Hendijani Zadeh, 2022; Cheng et al , 2021; Gul et al , 2013; Francis and Yu, 2009) as proxies for audit quality. We include SIZE, LEV, AR, CHAN_ROA, TA, SALES_GROWTH, BIG4, OWN_CON, M_A, MAGT_OWN and PER_IND as control variables (DeFond and Zhang, 2014; Legoria et al , 2013; Reichelt and Wang, 2010; Huang, 2021; Gul et al , 2013; Sun et al , 2020; Chen et al , 2010; Rajgopal et al , 2021).…”

Section: Methodsmentioning

confidence: 99%

“…SP is a dummy variable; it equals 1 if the return on assets is between 0 and 1%. Audit quality decreases when the probability of an SP increases (Gul et al , 2013; Rajgopal et al , 2021; Yu and Huang, 2022; Rosati et al , 2022; Hendijani Zadeh, 2022; Cheng et al , 2021; Francis and Yu, 2009). According to Shenzhen Stock Exchange Stock Listing Rules revised in 2018, if a company’s audited net profit for the last two fiscal years has been consecutively negative, or the net profit in the last two fiscal years has been consecutively negative because of retrospective restatement, it will face the risk of delisting.…”

Section: Methodsmentioning

confidence: 99%

“…where ABS_DA is the absolute value of DA. Audit quality decreases when the ABS_DA value increases (Yu and Huang, 2022;Rosati et al, 2022;Hendijani Zadeh, 2022;Cheng et al, 2021;Huang et al, 2016;Gul et al, 2013;Francis and Yu, 2009;Sun et al, 2020;Rajgopal et al, 2021;DeFond and Zhang, 2014). SP is a dummy variable; it equals 1 if the return on assets is between 0 and 1%.…”

Section: Models and Variablesmentioning

confidence: 99%

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Board informal hierarchy and audit quality: evidence from China

Zhang

Wang

Liao³

2023

MAJ

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Purpose Improving audit quality is an important research area of managerial accounting. This study focuses on the informal institutions within organizations and their impact on audit quality. Specifically, this study aims to examine the impact of the informal hierarchy among directors on audit quality. Design/methodology/approach The authors examine Chinese companies with listed shares from 2008 to 2020. The authors proxy for audit quality using discretionary accruals and small profits, and use ordinary least squares regression to test their hypotheses. Findings The results demonstrate that the informal hierarchy of the board improves audit quality. The results are robust to a battery of sensitivity analyses. Additionally, there is weak evidence that the effect of the board’s informal hierarchy on audit quality is weaker in state-owned enterprises. Moreover, the mechanism tests indicate that the board’s informal hierarchy improves audit quality through the improvement of internal controls. In addition, the impact of the informal hierarchy among directors on audit quality further improves firm performance. However, audit fees are not reduced further because the board’s informal hierarchy demands higher audit quality by choosing industry audit experts. Originality/value This study not only enriches the research on the economic consequences of the board’s informal hierarchy but also expands on studies on antecedents of audit quality.

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Section: Methodsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

Section: Models and Variablesmentioning

confidence: 99%

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Board informal hierarchy and audit quality: evidence from China

Zhang

Wang

Liao³

2023

MAJ

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“…, 2001). The development of agile was traced by Huang et al. (2009), who identified four stages: initial concept building, agile manufacturing, agile supply chains which redirected post-1999 discussion from manufacturing and finally, approaches to achieve and measure agility.…”

Section: Introductionmentioning

confidence: 99%

Lean and agile metrics. Literature review and framework for measuring leagile supply chain

Piotrowicz

Ryciuk

Szymczak

2021

IJPPM

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PurposeThe aim of this paper is to review metrics and develop a framework for measuring leagile supply chain. Metrics that are applicable in the lean, agile and leagile strategies are identified in the literature and are then combined into a framework that can reflect both agile and lean strategies – the leagile supply strategy.Design/methodology/approachThis work is based on the systematic literature review. Literature was collected, then lean and agile metrics were extracted, analysed, counted and grouped into the framework. Findings are compared against literature on leagile supply chain.FindingsFindings indicate that there are sets of metrics specific to lean strategy, such as are process-focused, cost, productivity, inventory and delivery-based metrics, and specific to agile such as flexibility, responsiveness, information sharing and cooperation. There are also metrics common for both strategies; they are related to time, quality and customer satisfaction. Lean measures are tangible and focused on internal processes and products, while agile measures are targeted at external environment.Practical implicationsThe framework could be used by practitioners as a starting point for performance system design.Originality/valueThere is a need to stop looking at lean and agile as separate and distinct supply strategies. Results of this research indicate that lean and agile are interlinked, both are focusing on customer satisfaction and quality. Applying a proposed set of metrics enables to design supply chain measurement system that reflects both strategies to measure leagile supply chain. The framework could be used by practitioners as a starting point for performance system design.

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“…Ensuring high-quality audits is pivotal not only for preserving the professional reputation of auditors but also for safeguarding the stability and health of the capital markets (Chun et al, 2005). The question of how to improve audit quality remains a perennial topic of interest in Vol 14, Issue 1, (2024) E-ISSN: To Link this Article: http://dx.doi.org/10.6007/IJARAFMS/v14-i1/20918 DOI:10.6007/IJARAFMS/v14-i1/20918 Published Online: 13 March 2024 academic circles (Yu & Huang, 2023). The quality of auditing is meaningfully affected by external regulatory frameworks and the conditions of the audit market(Hsiao-Lun & Chan-Jane, 2016).…”

Section: Introductionmentioning

confidence: 99%

Relaxation of Access Regulations for Securities Audit and Audit Quality: Evidence from the Implementation of China's New Securities Law

Zhang,

bin Balia

2024

IJARAFMS

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Ensuring high-quality audits is essential for preserving the professional reputation of auditors and safeguarding the stability and health of capital markets. Researchers have explored various factors influencing audit quality from diverse perspectives. In 2020, China introduced the New Securities Law, transitioning the securities service operations for audit firms from a pre-approval system to a post-event filing system aiming to foster a more open and competitive auditing environment. Its impact on audit quality has been a pressing concern for regulators and investors alike. Employing a quantitative analysis, this research utilizes panel data from A-share companies listed on the Shanghai and Shenzhen stock exchanges from 2016 to 2022 in China. The observations were analysed using the Ordinary Least Squares regression and the Difference-In-Difference model to investigate the effects of the New Securities Law on audit quality. The regression analysis demonstrates a positive relationship between the implementation of the New Securities Law and the enhancement of audit quality, even after adjusting for firm-fixed and time-fixed effects. The results reveal that the introduction of the New Securities Law has significantly improved audit quality in China's securities market. The findings underscore the effectiveness of regulatory reforms in enhancing audit quality, contributing valuable insights to the discourse on optimizing audit market regulation. Given the distinctive characteristics of China's securities market and its ongoing integration into the global financial system, further research is proposed to explore the long-term effects of the New Securities Law on audit quality and to examine the mechanisms through which policy changes influence auditing practices.

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Audit Office's unused capacity and audit quality

Cited by 7 publications

References 49 publications

Board informal hierarchy and audit quality: evidence from China

Board informal hierarchy and audit quality: evidence from China

Lean and agile metrics. Literature review and framework for measuring leagile supply chain

Relaxation of Access Regulations for Securities Audit and Audit Quality: Evidence from the Implementation of China's New Securities Law

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