Early Adopters of Mandatory Auditor Rotation and Audit Quality

Friedrich, Christian; Pappert, Nicolas; Quick, Reiner

doi:10.2139/ssrn.3693129

Cited by 2 publications

(1 citation statement)

References 43 publications

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“…This whole process is what audit quality is all about. Audit quality following Sari et al (2019) and Friedrich and Pappert (2020) has several measures. We use discretionary accruals (Bartov et al , 2000; Acar and Coskun, 2020) as they are able to divide accruals into discretionary and non-discretionary components, which makes it possible to detect earnings management.…”

Section: Methodology and Modelingmentioning

confidence: 99%

Mediating impact of integrated reporting on audit quality and market reactions in Africa: evidence from South Africa

Bagonza,

Chen,

Rech

2024

ARJ

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Purpose The purpose of this study is to investigate the mediating impact of integrated reporting on the relationship between audit quality and market reactions in Africa using South Africa as a sample. Design/methodology/approach The study sample size consists of 119 firms listed on the Johannesburg Stock Exchange. The study was carried out for the period 2011–2019. Market reactions were proxy by share price and adjusted market returns. The authors controlled for the effects of market reactions by using other firm specifics like operating income, assets, leverage and return on assets and thereafter carried out robustness checks included under additional analysis. Findings Results from the study showed that integrated reporting partially mediates the relationship between audit quality and market reactions. Moreover, audit quality has a positive significant impact on market reactions in the form of the share price. The results were obtained in addition to a robustness check using adjusted market returns as a proxy for market reactions. Practical implications Regulators and standard setters in other countries should make integrated reporting mandatory. This study not only informs the public and investors about the organization’s business performance but also reveals auditor assurances that enchase market confidence in the company. Social implications Exploring the mediating impact of integrated reporting on the relationship between audit quality and market reactions yields valuable insights. Integrated reporting, which combines financial and non-financial information, influences how investors perceive and react to audit quality. Understanding this interplay could shed light on the broader implications for corporate transparency and accountability. Originality/value The authors are the first to conduct such a study in an emerging economy. Hence, the authors used integrated reporting as a new variable in the study of audit quality and market reactions. Furthermore, the authors used adjusted market returns under robustness checks to check if audit quality has an impact on market reactions.

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Section: Methodology and Modelingmentioning

confidence: 99%

Mediating impact of integrated reporting on audit quality and market reactions in Africa: evidence from South Africa

Bagonza,

Chen,

Rech

2024

ARJ

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Auditor‐provided non‐audit services and perceived audit quality: Evidence from the cost of equity and debt capital

2022

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There is an ongoing debate among regulators and researchers about concerns that the provision of non‐audit services (NAS) to audit clients may impair audit quality by reduced independence. In this context, there can be different perspectives on audit quality. Given recent regulatory changes in the European Union (EU) aimed to improve investor confidence in audited financial statements, it is critical to understand the association of NAS and audit quality perceptions by investors before and after the regulation. We investigate whether NAS affect shareholder and lender perceptions of audit quality, measured by the cost of debt and equity capital. For a sample of German firms, we find significant positive associations of NAS with both cost of debt and cost of equity. Other assurance and consultancy services drive this effect. We do not find this effect in the pre‐regulation period, but in the transition period when the regulation was passed but NAS restriction did not yet apply. In the post‐regulation period, it only persists for lenders. Thus, the EU regulation may have increased (or inadequately created) independence concerns for shareholders and lenders and curbed these concerns for shareholders only.

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Early Adopters of Mandatory Auditor Rotation and Audit Quality

Cited by 2 publications

References 43 publications

Mediating impact of integrated reporting on audit quality and market reactions in Africa: evidence from South Africa

Mediating impact of integrated reporting on audit quality and market reactions in Africa: evidence from South Africa

Auditor‐provided non‐audit services and perceived audit quality: Evidence from the cost of equity and debt capital

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