Earnings management and audit report lag: The role of audit risk-Tunisian evidence

Abstract

Research question: This study investigates and analyzes the influence of earnings management on audit report lag. It also intends to develop a thorough understanding regarding the mediating effect of audit risk on this relation. Motivation: The outcomes of this paper will help to bridge the knowledge gap related to this issue in developing countries due to the importance of audit delay as it relates to corporate transparency. Idea: The issue of reporting delay is important as it relates to corporate transparency. Data: This study is based on a sample consisting of 28 Tunisian companies listed in the Tunis Stock Exchange (TSE) over the periods 2005 to 2010 (pre-2011 revolution) and 2011 to 2017 (post-2011 revolution). Tools: Consisting of 364 observations for the whole period, Structural Equation Modeling (SEM) approach is applied and three models are developed to examine the direct and the indirect link between earnings management and audit report lag. Findings: The results show that firms which manage their earnings upward are more likely to accelerate the release of their financial statements. In addition, in the Tunisian context, audit risk mediates the relationship between earnings management and audit report lag. Contribution: This study extends the existing literature by examining the mediation effect of audit risk on the relationship between earnings management and audit report lag.

The Effect of Audit Client Assets Tangibility on Audit Risk: An Empirical Study on Nonfinancial Firms Listed on the EGX

“…The fundamental idea of estimates made by management is strongly associated with these auditing practices. If there is a stronger internal control in place, this may minimize the danger of major distortion and, as a result, auditing risk (Choi et al, 2018;Fakhfakh & Jarboui, 2022).…”

“…The danger of delivering a clean opinion on financial statements that are materially misstated is referred to as audit risk, and it is directly correlated with the business risk of the auditor which is linked to the business risk of his client (Choi et al, 2018;Datta et al, 2020;Fakhfakh & Jarboui, 2022). For IR, significance may be taken into account concerning how and to what extent IR factors influence the possibility of a misstatement occurring as well as the potential size of the misstatement should it occur.…”

Pengaruh Earning Management, Ukuran Perusahaan, Leverage Dan Profitabilitas Terhadap Audit Risk Dan Audit Report Lag

“…Variabel-variabel yang digunakan pada penelitian ini adalah: Audit report lag adalah rentang waktu dalam proses penyelesaian laporan audit yang diukur berdasarkan jumlah hari dari tanggal tutup buku perusahaan sampai tanggal di tanda tanganinya laporan keuangan oleh auditor. Rumus untuk mengukur audit report lag (Fakhfakh and Anis, 2022) adalah : Audit report lag = Tanggal Laporan Audit -Tanggal laporan keuangan…”

“…Pengukuran earning management dengan menggunakan akrual diskresioner (DA) yang meningkatkan atau menurunkan pendapatan, yang melibatkan pembuatan estimasi dan penilaian oportunistik. Rumus untuk mengukur earning management (Fakhfakh and Anis, 2022) adalah : Di mana, TAit = Total akrual perusahaan i pada tahun t. Ait-1 = total aset perusahaan i pada tahun t-1; DREVit = perubahan pendapatan perusahaan i pada tahun t; DRECit = perubahan piutang usaha bersih perusahaan i pada tahun t; PPEit = singkatan dari nilai bruto aset tetap perusahaan i pada tahun t; ROAit = return on assets perusahaan i pada tahun t; BMit = book-to-market ratio perusahaan i pada tahun t. Total Accruals (TA) = Normal Accruals (NA) + Discretionary Accruals (DA) Dimana, Ukuran perusahaan merupakan besar kecilnya suatu perusahaan yang dapat diukur dari jumlah aset yang dimiliki perusahaan, total penjualan atau kapitalisasi pasar. Rumus untuk mengukur ukuran perusahaan (Fakhfakh and Anis, 2022)…”

“…Leverage merupakan penggunaan pinjaman dana atau modal untuk meningkatkan keuntungan bagi perusahaan. Rumus untuk mengukur leverage (Fakhfakh and Anis, 2022) adalah : Leverage = Total Liabilitas / Total Aset Profitabilitas adalah kemampuan perusahaan dalam memperoleh laba dengan menggunakan sumbersumber yang dimiliki oleh suatu perusahaan. Variabel profitabilitas diproksikan menggunakan rasio Return On Asset.…”