Client corruption culture and audit quality: the conditioning effect of the competitive position of the incumbent auditor

Fung, Simon; Pham, Viet Tuan; Raman, K. K.

doi:10.1007/s11156-022-01072-w

Cited by 13 publications

(6 citation statements)

References 65 publications

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“…Planned responses to unforeseen occurrences that might have an effect on financial stability are developed as part of a crisis management strategy (Oradi et al, 2020). Setting stop-loss orders or diversifying investment portfolios are two examples of the kinds of contingency planning that might help investors weather market volatility (Fung et al, 2022). This led to the development of the following hypothesis: H4: There is relationship between contingency planning and financial market volatility…”

Section: H3: There Is Relationship Between Hedging and Financial Mark...mentioning

confidence: 99%

The Influence of Risk Management Practices on Financial Market Stability: Insights from Lebanon

Houwayji

2024

DUTCH J FINANCE MANA

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This research investigates the relationship between various risk management practices, including diversification, hedging, and contingency planning, and their impact on the dependent variable, financial market volatility. The study is based on a sample size of 127 observations in the context of Lebanon's financial markets. The primary objective of this research is to analyze how risk management practices employed by financial institutions and market participants affect the stability of Lebanon's financial markets. To achieve this, the study employs a quantitative approach, utilizing statistical analysis and regression modeling to assess the relationships between the independent variables (risk management practices) and the dependent variable (financial market volatility). The independent variables in this study encompass risk management practices, namely diversification, hedging, and contingency planning. These practices are crucial components of financial risk management strategies employed by institutions and investors. By examining their influence on financial market stability, this research aims to provide insights into effective risk mitigation strategies within the Lebanese financial context. The decision of Lebanon as the study's context is significant due to the unique economic and geopolitical challenges faced by the country. The financial markets in Lebanon have been subject to various external and internal pressures, making the analysis of risk management practices particularly relevant. The sample size of 127 observations allows for robust statistical analysis, ensuring the validity of the findings. The research findings are expected to contribute to the existing body of knowledge on risk management and financial market stability, with potential implications for policymakers, financial institutions, and investors operating in Lebanon and similar emerging market economies.

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Section: H3: There Is Relationship Between Hedging and Financial Mark...mentioning

confidence: 99%

The Influence of Risk Management Practices on Financial Market Stability: Insights from Lebanon

Houwayji

2024

DUTCH J FINANCE MANA

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“…One stream of research examines country-level culture or deeply held national cultural values. For example, cross-country studies highlight the effects of culture on earnings management (Haga et al 2019), merger outcomes (Cao et al 2019), and audit quality (Fung et al 2022). At the same time, several researchers (e.g., Baskerville 2003;Zingales 2015) note problems of studying culture at an international and aggregate level.…”

Section: Corporate Culturementioning

confidence: 99%

Nothing to fear: strong corporate culture and workplace safety

Haga,

Huhtamäki,

Sundvik

et al. 2024

Rev Quant Finan Acc

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In this paper, we investigate the link between corporate culture and workplace safety. Using a machine learning based measure of corporate culture and data on employee- and safety-related violations, we find that firms with stronger corporate culture are less likely to be penalized, incur lower regulatory fines, and have a reduced number of violations. As a potential channel, we document higher safety expenditures with stronger corporate culture. When we examine establishment-level data on actual injuries and illnesses, we find that firms with stronger corporate culture have significantly lower injury and illness rates. While shareholders have previously been found to benefit from a stronger corporate culture, we contribute with both research and practical implications on the positive effects of a strong corporate culture for employees and society at large.

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“…The importance of social ties is also featured by adopting an impression management viewpoint of interview responses by participants in French company audit committee activities (Compernolle, 2018). Fung et al (2022), based on US data, found that the competitive advantage of the incumbent auditor in the local market influences the audit quality in the context of client corruption culture. While this study approach is different, Fung et al (2022) illustrate the value relevance of the incumbent auditor on the audit quality, which this paper argues from a different perspective.…”

Section: Theoretical Background and Hypothesis Developmentmentioning

confidence: 99%

“…Fung et al (2022), based on US data, found that the competitive advantage of the incumbent auditor in the local market influences the audit quality in the context of client corruption culture. While this study approach is different, Fung et al (2022) illustrate the value relevance of the incumbent auditor on the audit quality, which this paper argues from a different perspective.…”

Section: Theoretical Background and Hypothesis Developmentmentioning

confidence: 99%

Audit committee characteristics as determinants of non-audit fees in UK FTSE 350 companies

Wigglesworth,

Shubita,

Combs

2023

IJOA

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Purpose This study aims to examine trends in audit committee characteristics of companies and associates characteristics subject to major change with a fee-based proxy for audit committee effectiveness. Design/methodology/approach The research adopts an empirical approach. Using descriptive and inferential statistics, observations for 253 Financial Times Stock Exchange 350 companies’ audit committee characteristics gathered from annual reports at the beginning and end of a five-year period are evaluated against averaged non-audit fees (NAF) as a proportion of total audit fees. Findings Audit committee composition shows an increased incidence of female membership and of members with previous audit experience. The increase in members with previous audit experience is more marked where this is gained with the incumbent auditor. An increase is also shown in chief financial officers with previous audit experience. Previous audit experience is associated with reduced NAF as a proportion of total fees. This is marked where audit experience has been gained with the incumbent auditor. These results suggest that the benefits of financial expertise gained from audit experience outweigh impairments to independence due to social ties. Nevertheless, other studies indicate concerns about independence are still well-founded. Originality/value This paper’s original contribution is to evaluate the potential effect of previous audit experience on those involved in audit committees in light of concerns raised in the literature and by regulators that external auditor independence should be maintained. The innovative fee-based proxy for audit committee effectiveness facilitates an evaluation as to which influence prevails.

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Client corruption culture and audit quality: the conditioning effect of the competitive position of the incumbent auditor

Cited by 13 publications

References 65 publications

The Influence of Risk Management Practices on Financial Market Stability: Insights from Lebanon

The Influence of Risk Management Practices on Financial Market Stability: Insights from Lebanon

Nothing to fear: strong corporate culture and workplace safety

Audit committee characteristics as determinants of non-audit fees in UK FTSE 350 companies

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