The Effects of Auditor Tenure on Fraud and Its Detection

Patterson, Evelyn; Smith, Jane; Tiras, Samuel L.

doi:10.2308/accr-52370

Cited by 47 publications

(22 citation statements)

References 18 publications

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“…This result supports the second hypothesis. This result is consistent with those of Cameran et al (2015), and Patterson et al (2019) and also, is consistent with the knowledge gap hypothesis.…”

Section: Regression Resultssupporting

confidence: 92%

Auditor characteristics and the financial reporting quality: the moderating role of the client business strategy

Soroushyar

2022

AJAR

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PurposeThis study examines whether and how a client's business strategy can affect the relationship between auditor characteristics and financial reporting quality.Design/methodology/approachIn this study, auditor industry specialization and tenure were used as proxies for auditor characteristics. The client business strategy was measured using the resource allocation index method. Finally, discretionary accruals are used to assess financial reporting quality. This study includes 1,450 firm-year observations and 145 companies listed on the Tehran Stock Exchange (TSE) over a ten-year period from 2011 to 2020. The research hypotheses were analyzed using a multivariate regression model and panel data.FindingsThe results show that auditor industry specialization increases financial reporting quality. This relationship improves when the client's business strategy deviates from the industry–normal strategy. The research findings state that auditor tenure has a positive association with financial reporting quality, and this relationship is strengthened when the company's business strategy deviates from the normal industry strategy.Practical implicationsThe findings of this study provide important evidence for investors, firm management, and auditing firms. Investors must consider the auditor characteristics when selecting companies listed on the TSE. Managers of Iranian companies are advised to consider the auditor's characteristics when choosing an audit firm to increase financial reporting quality. Audit firms should evaluate their business strategies in audit planning to increase the quality of financial reporting.Originality/valueTo the best of the authors’ knowledge, this is the first empirical study to examine the relationship between auditor characteristics and the financial reporting quality in the emerging capital market by considering the clients' business strategy.

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Section: Regression Resultssupporting

confidence: 92%

Auditor characteristics and the financial reporting quality: the moderating role of the client business strategy

Soroushyar

2022

AJAR

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“…The correlation between audit quality and mandate length has been the subject of several studies (Ball, Tyler, & Wells, 2015;Cameran, Prencipe, & Trombetta, 2016;Patterson, Smith, & Tiras, 2019). Thus, to the extent that this factor may impact both the independence and competence of the auditor, the results of their studies have been controversial.…”

Section: The Mandate Length Of Auditor and The Fraud Riskmentioning

confidence: 99%

“…Thus, to the extent that this factor may impact both the independence and competence of the auditor, the results of their studies have been controversial. Indeed, Cameran et al (2016) and Patterson et al (2019) argue that mandate is negatively correlated with audit quality. Ball et al (2015), on the other hand, has shown that the longevity of tenure improves audit quality.…”

Section: The Mandate Length Of Auditor and The Fraud Riskmentioning

confidence: 99%

Legal Audit Quality and Fraud Risk: The Case of Tunisian Listed Companies

Lajmi¹,

Khiari²,

Ouertani³

2021

ijafr

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The aim of this study is to examine the impact of legal audit quality on the likelihood of accounting fraud, for a sample of 48 companies listed on the Tunisian stock market over the period between 2014 and 2018. Based on the logit panel regression, we have shown that the audit firm's membership in one of the Big networks and the rotation of external auditors are two major determinants in the reduction of cases of fraud in Tunisian companies. In addition, the results showed that joint audit deteriorates the quality of auditing and thus increases the risk of fraud. This study provides new insights in terms of legal audit and fraud risk in the Tunisian context based on the econometrics of panel data, which is a valuable method to measure the impact of several actions alone or simultaneously. It has allowed us to analyze the behaviors of companies by considering the effect of many proxies of legal audit quality. JEL Classification Codes: G32, M42, C23.

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“…Based on past literature (e.g., Amir, Guan, & Livne, 2018;Bae et al, 2019;Bebchuk, 2005;Chen et al, 2012;Defond & Zhang, 2014;Engel, Hayes, & Wang, 2010;Minutti-Meza, 2013;Patterson et al, 2019), the equations above also include diverse control variables which affect the dependent variables. These control variables are defined as follows.…”

Section: Empirical Modelsmentioning

confidence: 99%

The beneficial effect of shareholder participation in general meetings: Evidence in the context of audit quality

Bazrafshan

Banaiy

Bazrafshan

2021

RBGN

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Purpose -This paper aims to investigate how shareholder participation in general meetings (SPGM) affects audit quality.Design/methodology/approach -We measure SPGM as the percentage of the ownership represented by the shareholders who attend the general meeting. We measure audit quality by auditor industry specialization, audit firm size, and auditor fees. In order to investigate the relationship between SPGM and audit quality, we use a sample of 576 firm-years from Iran's capital market between 2012 and 2018 and employ multivariate regression analysis.Findings -The findings show that, in general, there is an insignificant relationship between SPGM and audit quality. However, we reveal that there is a positive and significant association between the presence of institutional shareholders in general meetings and audit quality. Furthermore, for the companies with a high presence of institutional shareholders in their general meetings, there is a significant and positive relationship between the participation of other shareholders in the general meetings and audit quality. Our findings are robust in regards to a variety of additional tests.Originality/value -Collectively, the findings reveal that the impact of SPGM on audit quality is conditional to the presence of institutional shareholders in general meetings. The findings provide further insights among the mixed evidence on the beneficial effects of SPGM.

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The Effects of Auditor Tenure on Fraud and Its Detection

Cited by 47 publications

References 18 publications

Auditor characteristics and the financial reporting quality: the moderating role of the client business strategy

Auditor characteristics and the financial reporting quality: the moderating role of the client business strategy

Legal Audit Quality and Fraud Risk: The Case of Tunisian Listed Companies

The beneficial effect of shareholder participation in general meetings: Evidence in the context of audit quality

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