Auditor Selection Continuity, Audit Quality and Audit Fees in Listed Companies on Tehran Stock Exchange (Iran)

Ibrahim VahidiElyzei, Soroush Shanaki

Abstract


The purpose of this study is to investigate the relationship between auditor selection continuity, audit quality and audit fees in listed companies on Tehran Stock Exchange. The amount of audit quality has been measured by the index of accruals ratio. To test research hypotheses and to investigate the relationship between the variables the data related to 64 companies listed on Tehran Stock Exchange has been used as the research statistical sample for the period of 2010 to 2015. The data has been analyzed using pooled data analysis method based on multivariate regression. Chow test was used to estimate hypotheses test appropriate model in pooled data. The study results suggest that auditor selection continuity has a positive and significant relationship with auditor’s audit quality. That’s to say, by increasing the audit tenure period by an auditor the quality of its operation has increased. Also, the results showed that there is a significant positive relationship between audit quality and audit fees paid to auditors in listed companies on Tehran Stock Exchange.

References


Beck, M. J., Glendening, M., & Hogan, C. E. (2016). Financial Statement Disaggregation, Auditor Effort and Financial Reporting Quality: working paper, Michigan State University.

Becker, C. L., DeFond, M. L., Jiambalvo, J., & Subramanyam, K. (1998). The effect of audit quality on earnings management. Contemporary Accounting Research, 15(1), 1-24.

Brivot, M., Roussy, M., & Mayer, M. (2017). Conventions of Audit Quality: The Perspective of Public and Private Company Audit Partners. Auditing: A Journal of Practice and Theory.

Cahan, S. F., & Sun, J. (2015). The effect of audit experience on audit fees and audit quality. Journal of Accounting, auditing & finance, 30(1), 78-100.

Callao, S., Jarne, J. I., & Wróblewski, D. (2014). The development of earnings management research. Zeszyty Teoretyczne Rachunkowosci, 79(135).

Cameran, M., Prencipe, A., & Trombetta, M. (2008). Earnings management, audit tenure and auditor changes: does mandatory auditor rotation improve audit quality. Diakses pada http://www. fdewb. unimaas. nl.

Carcello, J. V., Hermanson, R. H., & McGrath, N. T. (1992). Audit quality attributes: The perceptions of audit partners, preparers, and financial statement users. Auditing, 11(1), 1.

Chen, C. Y., Lin, C. J., & Lin, Y. C. (2008). Audit partner tenure, audit firm tenure, and discretionary accruals: Does long auditor tenure impair earnings quality? Contemporary Accounting Research, 25(2), 415-445.

Chung, H., & Kallapur, S. (2003). Client importance, nonaudit services, and abnormal accruals. The Accounting Review, 78(4), 931-955.

Dale, B. G., Van der Wiele, T., & Van Iwaarden, J. (2007). Managing quality: John Wiley & Sons.

Dogui, K., Boiral, O., & Herasâ€Saizarbitoria, I. (2014). Audit fees and auditor independence: The case of ISO 14001 certification. International Journal of Auditing, 18(1), 14-26.

Francis, J. R. (2011). A framework for understanding and researching audit quality. Auditing: A Journal of Practice & Theory, 30(2), 125-152.

Gaynor, L. M., Kelton, A. S., Mercer, M., & Yohn, T. L. (2016). Understanding the relation between financial reporting quality and audit quality. Auditing: A Journal of Practice & Theory, 35(4), 1-22.

Gonthierâ€Besacier, N., Hottegindre, G., & Fineâ€Falcy, S. (2016). Audit Quality Perception: Beyond the ‘Roleâ€Perception Gap’. International Journal of Auditing, 20(2), 186-201.

Hardies, K., Breesch, D., & Branson, J. (2016). Do (fe) male auditors impair audit quality? Evidence from going-concern opinions. European Accounting Review, 25(1), 7-34.

Hoai Nam, L. (2011). Audit Fees, Auditor Independence and Audit Quality: A New Zealand evidence, PhD RESEARCH PROPOSAL, School of Accounting and Commercial Law, Victoria University of Wellington.

Khalil, M., & Ozkan, A. (2016). Board independence, audit quality and earnings management: evidence from Egypt. Journal of Emerging Market Finance, 15(1), 84-118.

Knechel, W. R., & Vanstraelen, A. (2007). The relationship between auditor tenure and audit quality implied by going concern opinions. Auditing: A Journal of Practice & Theory, 26(1), 113-131.

Kuan, K. (2015). Why private interest theory should be used to evaluate the adequacy of the auditor independence requirements in CLERP 9. Corporate Law Teachers Association (CLTA).

Lennox, C., Wu, X., & Zhang, T. (2016). The effect of audit adjustments on earnings quality: Evidence from China. Journal of accounting and economics, 61(2-3), 545-562.

Lennox, C. S. (1999). Audit quality and auditor size: An evaluation of reputation and deep pockets hypotheses. Journal of Business Finance & Accounting, 26(7â€8), 779-805.

Mayangsari, J. (2007). Audit firm size, industry specialization, audit tenure and earnings management by initial public offering firms: Working paper, Available online at: www. ssrn. com.

Rath, S., & Sun, L. (2008). The development of earnings management research. International Review of Business Research Papers, 4(2), 265-277.

Salehi, M., Moradi, M., & Paiydarmanesh, N. (2017). The Effect of Corporate Governance and Audit Quality on Disclosure Quality: Evidence from Tehran Stock Exchange. Periodica Polytechnica. Social and Management Sciences, 25(1), 32.

Teck-Heang, L., & Ali, A. M. (2008). The evolution of auditing: An analysis of the historical development. Journal of Modern Accounting and Auditing, 4(12), 1.

Turel, A., Genç, M., Özden, B., & Taş, N. (2017). Audit Firm Tenure and Audit Quality Implied by Discretionary Accruals and Modified Opinions: Evidence from Turkey. Acta Universitatis Danubius. Œconomica, 13(1).

Vanstraelen, A. (2000). Impact of renewable long-term audit mandates on audit quality. European Accounting Review, 9(3), 419-442.


Refbacks

  • There are currently no refbacks.


Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

World of Researches Publication