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Impact Of Audit Fees And Audit Firms Reputation On Audit Quality
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Book Synopsis Impact of Audit Fees and Audit Firm's Reputation on Audit Quality by : Ammar Qadir Sheikh
Download or read book Impact of Audit Fees and Audit Firm's Reputation on Audit Quality written by Ammar Qadir Sheikh and published by . This book was released on 2020 with total page 29 pages. Available in PDF, EPUB and Kindle. Book excerpt: Audit quality is viewed as a basic element influencing the dependability of financial statements. The objective of this study is to investigate the impacts of audit firm characteristics, including audit firms' reputation and audit fees on the quality of auditing. We utilized discretionary/irregular accruals serving as a proxy for income manipulation, and audit firms' reputation (Big 4 auditors vs Non-Big 4 auditors), and audit fees are utilized to examine the quality of auditing. A sample comprised of 49 listed firms from the KSE-100 index of Pakistan Stock Exchange (PSX) is selected for the duration of 5 years. The data is evaluated through multiple regression and correlations. The outcomes suggested that audit Fee seems to have a significant and negative effect on the quality of auditing, Audit quality also seems to affect ROA negatively, whereas, audit fee affected ROA positively. Lastly, the Big 4 representation has a negative effect on cash flows, whereas audit quality seems to have an inverse effect. The outcomes indicate that non-Big 4 audit firms in Pakistan perform higher quality of auditing than Big 4 audit firms. In addition to that, the outcome discloses that in exchange of higher audit fees, auditors perform lower quality of audits. The basic job of audit quality has gathered remarkably academic consideration. Though, earlier researches have basically centered on organizations operating in developed nations. Very limited is investigated about the quality of auditing in developing economies, for example, Pakistan. This investigation would increase the predetermined number of researches conducted on the quality of auditing of listed firms in developing nations.
Book Synopsis Audit Firm Reputation Versus Auditor Capability by : Astrid Rudyanto
Download or read book Audit Firm Reputation Versus Auditor Capability written by Astrid Rudyanto and published by . This book was released on 2018 with total page 9 pages. Available in PDF, EPUB and Kindle. Book excerpt: Objective -The emergence of the ASEAN Single Window has triggered the need for higher audit quality in ASEAN countries, including Indonesia. A recent study conducted in Indonesia reveals that the reputation of auditing firms, as rated by clients and users, and auditor's competence, as rated by the auditor, are the primary determinants of audit quality. The purpose of this study is to analyze whether the reputation or competence of an auditor affects audit quality, within manufacturing companies in Indonesia. Methodology/Technique -This paper contributes to the creation of new measurements for auditor capability, by highlighting empirical evidence concerning the determinants of audit quality in Indonesia. Findings - By using discretionary accrual as the inverse determinant of audit quality, the result show that financial statements audited by reputable auditing firms contain the same discretionary accruals as those audited by other firms. The results further demonstrate that auditor capability does not affect audit quality. Audit quality in Indonesia is therefore not determined by firm reputation or auditor capability. Hence, it is important to search for new determinants of audit quality. Research Limitations/Implications - The limitation of this research is the low number of reputable audit firms and specialized auditors used by the sample firms, which lead to the exclusion of numerous controlled variables that may be integral when explaining audit quality. Future studies may use other sample firms and use additional controlled variables, to further explain audit quality. Type of Paper: Empirical.
Download or read book Audit Quality written by Jonas Tritschler and published by Springer Science & Business Media. This book was released on 2013-10-31 with total page 251 pages. Available in PDF, EPUB and Kindle. Book excerpt: Arising from the author’s experience as a practicing CPA, this book is quite different from other research in this field, as it confronts the subject of audit quality from a pragmatic perspective. The first goal of Jonas Tritschler is to develop an audit quality metric on national audit firm level. Financial reporting errors, as detected by the German enforcement institutions during examinations, which subsequently are published in the German Federal Gazette by the involved companies, are the data basis for this measurement. Using the developed audit quality metric, the second goal of this study is to analyze audit quality differences of selected audit firms by comparing their deployed audit input factors such as employee’s competence (ratio of certified professionals to total audit staff), experience of employees (average tenure of employees in years) and client-specific experience (client fluctuation rate). Results indicate a correlation between audit quality according to the developed metric and the operationalized audit input factors mentioned above.
Book Synopsis Audit Firm Ranking, Audit Quality and Audit Fees by : Fakhroddin Mohammadrezaei
Download or read book Audit Firm Ranking, Audit Quality and Audit Fees written by Fakhroddin Mohammadrezaei and published by . This book was released on 2018 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In this study, we examine whether highly ranked audit firms in Iran, as determined by the Securities and Exchange Organization (SEO), earn a fee premium, firstly, by providing superior quality audit services or, secondly, due to reputation created by the ranking system implemented by the SEO. We employ price discrimination theory, and test quality discrimination versus brand reputation explanations in the context of a unique institutional setting (where international audit firms are not allowed to operate). The data are derived from firms listed on the Tehran Stock Exchange (TSE) for the period 2006 to 2015. Our results show that the quality of audit services (using all of our measures) provided by the highest ranked audit firms is not superior to that of the non-highest ranked firms. In addition, the audit fee models suggest that the highest ranked firms charge significantly more audit fees compared to lower ranked firms. We employ several sensitivity tests and the results do not change materially. Such findings go against the 'quality-based price discrimination' view but support the reputation-based view, and make a significant contribution towards understanding the economic consequences of state-determined ranking of audit firms rather than allowing the market to determine quality differentiation.
Book Synopsis An Investigation of the Relationship Between Audit Fees and Auditor Reputation by : Timothy A. Pearson
Download or read book An Investigation of the Relationship Between Audit Fees and Auditor Reputation written by Timothy A. Pearson and published by . This book was released on 1990 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Audit Firm Split-Up by : Alexandra Lilge
Download or read book Audit Firm Split-Up written by Alexandra Lilge and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using a game-theoretical model, we examine reasons and driving forces for audit firm split-ups, like the case of EY. In addition, we also analyze the potential consequences of audit firm split-ups on both the audit market and the audit quality. We find that the split-up decision is mainly driven by two aspects, the audit failure probability and spillovers from audit to advisory. As the audit quality suffers from a loss of advisory expertise, on the one hand, but benefits from the reduction of independence problems, the effect on audit quality is ambiguous. Moreover, we show that although combined audit firms can generate returns from advisory, a stand-alone audit firm sometimes offers a lower audit fee.
Book Synopsis The Impact of Reputation, Audit Contract Type, Tenure, Audit Fees and Other Services on Auditors' Perceptions of Audit Quality by : Millicent Chang
Download or read book The Impact of Reputation, Audit Contract Type, Tenure, Audit Fees and Other Services on Auditors' Perceptions of Audit Quality written by Millicent Chang and published by . This book was released on 1994 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author :Dan A. Simunic Publisher :Canadian Certified General Accountants' Research Foundation = Fondation de recherche de l'Association des comptables généraux licenciés du Canada ISBN 13 : Total Pages :90 pages Book Rating :4.3/5 (512 download)
Book Synopsis Product Differentiation in Auditing by : Dan A. Simunic
Download or read book Product Differentiation in Auditing written by Dan A. Simunic and published by Canadian Certified General Accountants' Research Foundation = Fondation de recherche de l'Association des comptables généraux licenciés du Canada. This book was released on 1987 with total page 90 pages. Available in PDF, EPUB and Kindle. Book excerpt: A fundamental question with respect to the market for audit services is whether or not such services are homogeneous across suppliers ... In this monograph, we review the basic principles and findings concerning differentiated product markets as they have been developed in the economic literature. Using Lancaster's characteristics framework, we posit that the audit service contains several attributes which are valued by top management. A key attribute is "credibility", which is communicated by an audit firm's brand name and is identified with the power of an auditor's test ... We posit that, along with other product characteristics, the power of test varies systematically across audit firms. Hypotheses concerning the demand for different audit service specifications (qualities) are developed in a context where companies are changing their capital structure through an initial public offering of common shares. These hypotheses are tested using a sample of 469 U.S. corporations which first "went public" during 1981. The results are consistent with the existence of differential audit services.
Book Synopsis The Routledge Companion to Auditing by : David Hay
Download or read book The Routledge Companion to Auditing written by David Hay and published by Routledge. This book was released on 2014-09-15 with total page 387 pages. Available in PDF, EPUB and Kindle. Book excerpt: Auditing has been a subject of some controversy, and there have been repeated attempts at reforming its practice globally. This comprehensive companion surveys the state of the discipline, including emerging and cutting-edge trends. It covers the most important and controversial issues, including auditing ethics, auditor independence, social and environmental accounting as well as the future of the field. This handbook is vital reading for legislators, regulators, professionals, commentators, students and researchers involved with auditing and accounting. The collection will also prove an ideal starting place for researchers from other fields looking to break into this vital subject.
Book Synopsis Client-Based Measure of the Audit Office Reputation and Its Association with Audit Fees, Earnings Quality, and Client's Market Value by : Sharad Asthana
Download or read book Client-Based Measure of the Audit Office Reputation and Its Association with Audit Fees, Earnings Quality, and Client's Market Value written by Sharad Asthana and published by . This book was released on 2014 with total page 2 pages. Available in PDF, EPUB and Kindle. Book excerpt: Following the findings from marketing and management literature on corporate reputation, we develop a new proxy to measure the audit office reputation and examine the impact of this measure on audit fees and audit quality. We argue that the presence of reputable clients and their tenure with the audit office is an unbiased and strong testimony for audit office reputation. Following this argument, we use the proximity of clients to the S&P 500 Index and Fortune's List of Most Admired Companies, weighted by the tenure of the audit office-client relationship, to estimate our client-based audit office reputation measure (CBAR). For a sample of 3,233 audit firm clients we find that our measure of audit office reputation is positively associated with audit fees and audit quality (proxied by absolute discretionary accruals, meet-or-beat-earnings expectations, and restatements). We also show that the earnings of clients from audit offices with higher CBAR are valued higher, suggesting that the market perceives the reputation of such offices to be higher and the earnings of their clients to be more credible. This research is important since CBAR is a new and readily available measure of audit office quality that provides incremental explanatory power for audit fees and audit quality beyond previously available measures.
Book Synopsis The Economics of Audit Quality by : Benito Arrunada
Download or read book The Economics of Audit Quality written by Benito Arrunada and published by Springer Science & Business Media. This book was released on 2013-11-11 with total page 203 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book focuses on market mechanisms which protect quality in the provision of audit services. The role of public regulation is thus situated in the context defmed by the presence of these safeguard mechanisms. The book aims to contribute to a better understanding of these market mechanisms, which helps in defining the con tent of rules and the function of regulatory bodies in facilitating and strengthening the protective operation of the market. An analysis at a more general level is provided in the three chapters making up Part 1. In the four chapters of Part 2, on the other hand, this analysis is applied to a particular problem to determine how those non-audit services often provided by auditors to their audit clients should be regulated. Finally, Chapter 8 contains a summary of the analysis and conclusions of the work. The conclusion with regard to non-audit services is that their provision generates beneficial effects in terms of costs, technical competence, professional judgment and competition and, moreover, need not prejudice auditor independence or the quality of these services. This as sessment leads, in the normative sphere, to recommending a legislative policy aimed at facilitating the development and use of safeguards provided by the free action of market forces. Regulation should thus aim to enable the parties-audit firms, self-regulatory bodies and audit clients-to discover through competitive market interaction both the most efficient mix of services and the corresponding quality safeguards, adjusting for the costs and benefits of each possibility.
Book Synopsis Logit and Probit by : Vani K. Borooah
Download or read book Logit and Probit written by Vani K. Borooah and published by SAGE. This book was released on 2002 with total page 108 pages. Available in PDF, EPUB and Kindle. Book excerpt: Many problems in the social sciences are amenable to analysis using the analytical tools of logit and probit models. This book explains what ordered and multinomial models are and also shows how to apply them to analysing issues in the social sciences.
Book Synopsis Effect of Client Reputation on Audit Fees at the Office Level by : Sharad Asthana
Download or read book Effect of Client Reputation on Audit Fees at the Office Level written by Sharad Asthana and published by . This book was released on 2013 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Prior studies have examined the effect of a decline in the auditor's or client's reputation on auditor switching, market shares, and stock prices. We extend these studies by examining the effect of an unexpected increase in a client's reputation on audit fees at the office level. We argue that association with a reputed client will enhance the auditor's reputation and establish a brand name, thus enabling the auditor to charge higher fees from other clients. Using a client's inclusion into the prestigious S&P 500 index as a proxy for the client's change in reputation, we find that the audit fees are discounted for this S&P client when it enters the index. The audit fee for this client increases following its exit from the index. We posit that changes in the audit fees for the S&P 500 clients are attributable to the changes in the reporting quality of these firms following their entry to and exit from the index. We also find increases in the audit fees of non-S&P clients of the audit office around such events. We argue that the presence of S&P clients helps auditors differentiate themselves from other auditors and allows them to extract rents from non-S&P clients. Lastly, we find no evidence of improvement in the reporting quality of other non S&P clients, supporting our rent extraction story.
Book Synopsis Does Audit Firm Size Matter? The Effect of Audit Firm Size Measured by Audit Firm Revenues, Number of Offices, and Professional Headcounts on Audit Quality and Audit Fees by : Gil S. Bae
Download or read book Does Audit Firm Size Matter? The Effect of Audit Firm Size Measured by Audit Firm Revenues, Number of Offices, and Professional Headcounts on Audit Quality and Audit Fees written by Gil S. Bae and published by . This book was released on 2013 with total page 54 pages. Available in PDF, EPUB and Kindle. Book excerpt: Using audit firm size measured by audit firm revenues, the number of offices, and professional headcounts, we find that audit firm size measured as continuous variable is positively associated with engagement-level audit quality proxied by discretionary accruals and modified opinions, and is also positively associated with audit fees. The Big 4 audit firms differ considerably in size and their size also measured by revenues, the number of offices, and professional headcounts is significantly associated with the audit quality and audit fee differences across Big 4 auditors. However, we find only limited evidence of the hypothesized relation between associate-to-partner ratio (i.e., human capital leverage) and audit quality, and find no evidence that associate-to-partner ratio is associated with audit fees.
Book Synopsis Non-Audit Service Fees and Audit Quality by : Chee Yeow Lim
Download or read book Non-Audit Service Fees and Audit Quality written by Chee Yeow Lim and published by . This book was released on 2013 with total page 59 pages. Available in PDF, EPUB and Kindle. Book excerpt: Recent studies on whether the provision of non-audit services impairs audit quality document mixed results, depending on the proxy for auditor quality used. We posit that the effect of non-audit fees on audit quality is conditional on auditor industry specialization in that audit quality is less likely to be impaired in the case of industry specialist auditors providing non-audit services. Our premise is that industry specialist auditors are more likely to be concerned about reputation losses and litigation exposure, and to benefit from knowledge spillovers from the provision of non-audit services. We find some evidence that audit quality (as measured by increased propensity to issue going-concern opinion, increased propensity to miss analysts' forecasts, as well as higher earnings-response coefficients) is less likely to be reduced for firms that acquire non-audit services from industry specialist auditors compared to non-specialist auditors. Implications are discussed.
Book Synopsis Technological Innovation's Impact on Audit Quality and Audit Fees by : Aaron Fritz
Download or read book Technological Innovation's Impact on Audit Quality and Audit Fees written by Aaron Fritz and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the impact of advances in communication technology on audit quality and audit fees over the first two decades of the twenty-first century. Using theories on virtual teams from the management literature and distant audits as a setting where auditors and clients are most reliant on communication technology, I hypothesize that advances in communication technology improve audit quality over time for distant audits, specifically, and when compared to local audits. With two measures of audit quality (discretionary accruals and misstatements) and an analysis that identifies three "eras" of communication technology in the 2000s, I find evidence that audit quality has seen statistically significant improvement over time with advances in communication technology for distant audits and that this improvement is statistically significant when compared to local audits as a control group. In an additional test, I find evidence that advances in communication technology also impact audit fees. Specifically, audit fees of distant audits increase over time at a lower rate than local audits suggesting that distant audits benefit more from advances in communication technology. These results are important because they provide evidence that communication technology has benefited audits by increasing quality and reducing fees, particularly for distant audit clients. This is relevant to the current audit environment where firms are considering long-term remote working strategies that will be heavily reliant on these technologies.
Book Synopsis Can Audit Fees Inhibit Accounting Misstatements? Moderating Effects of Auditor Reputation from Chinese Experience by : Bin Li
Download or read book Can Audit Fees Inhibit Accounting Misstatements? Moderating Effects of Auditor Reputation from Chinese Experience written by Bin Li and published by . This book was released on 2015 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the association between audit fees and accounting misstatements, and test the moderating effect of auditor reputation on this association in China, where auditors' legal liability is essentially weak. We find that current-year audit fees are negatively and significantly associated with the likelihood of current-year financial statement being misstated. This result is consistent with prior work, indicating a negative relation between audit fees and future misstatements in a strong litigation environment such as in the United States. This finding indicates that higher audit fees can reflect audit effort, even in a setting where litigation plays essentially no role. Prior literature suggests that audit firms have reputational incentives; thus, we use auditor irregularities and audit firm rank as proxies for auditor reputation and find that the negative relationship between misstatements and audit fees weaken as auditor reputation decreases. Our results indicate that auditor reputation can negatively moderate the relationship between audit fees and misstatements and is more important in the absence of litigation.
