Evaluating the Effect of Abnormal Audit Fees on Future Restatements

2012 ◽  
Vol 7 (1) ◽  
pp. P15-P21 ◽  
Author(s):  
Alan I. Blankley ◽  
David N. Hurtt ◽  
Jason E. MacGregor
Keyword(s):  
Negative Relationship ◽  
Audit Fees ◽  
Audit Committees ◽  
Client Retention ◽  
Audit Planning ◽  
The Future ◽  
The Relationship

SUMMARY This article summarizes our recently published article, “Abnormal Audit Fees and Restatements” (Blankley et al. 2012), which discusses the relationship between abnormal audit fees and future restatements. We find that there is a negative relationship between the two; specifically, unusually low audit fees are associated with an increased likelihood of a future restatement (i.e., one or two years in the future). This relationship has important implications for auditors in terms of audit planning, pricing, and client retention. After summarizing the published study, we discuss how examining abnormal audit fees may be useful for audit professionals and audit committees.

scholarly journals Gender Diversity of Audit Committees and Audit Fees: Evidence from Chinese Listed Companies

2015 ◽  
Vol 7 (2) ◽  
pp. 239 ◽  
Author(s):  
Rui Xiang ◽  
Meng Qin ◽  
Craig A Peterson
Keyword(s):  
Audit Committee ◽  
Gender Diversity ◽  
Audit Fees ◽  
Listed Companies ◽  
Audit Committees ◽  
Men And Women ◽  
Public Company ◽  
Chinese Listed Companies ◽  
State Enterprises ◽  
The Relationship

<p>This paper investigates whether women, who serve on the audit committee of the board, can have a significant impact in reducing audit fees paid by China's A-share listed companies during the period 2004 to 2007. We show that audit committees composed of both men and women pay significantly smaller audit fees. The relationship is significantly greater in non-state enterprises than that exhibited by state-owned enterprises and significantly greater in companies deemed to have weak management vis-à-vis strong management. Further analysis shows that the composition of the committee is irrelevant when management is strong, regardless of whether it provides guidance for a state-owned enterprise or a strictly public company. When management is deemed weak, however, gender diversity is associated with smaller fees.</p>

Going-Concern Audit Opinions and the Provision of Nonaudit Services: Implications for Auditor Independence of Bankrupt Firms

2009 ◽  
Vol 28 (1) ◽  
pp. 153-169 ◽  
Author(s):  
Joseph Callaghan ◽  
Mohinder Parkash ◽  
Rajeev Singhal
Keyword(s):  
Negative Relationship ◽  
Audit Fees ◽  
Managerial Incentives ◽  
Auditor Independence ◽  
Empirical Question ◽  
Going Concern ◽  
Nonaudit Services ◽  
Auditor Fees ◽  
The Relationship ◽  
The U.S

SUMMARY: Researchers in the area of auditor independence have examined the relationship between auditors' opinions and auditor-provided services. While DeFond et al. (2002) and Geiger and Rama (2003) fail to find auditor impairment for distressed U.S. companies, Sharma (2001) and Sharma and Sidhu (2001) find a negative relationship between the likelihood of a going-concern (GC) opinion and nonaudit fees paid to auditors for bankrupt Australian companies. These conflicting results may arise from jurisdictional differences between Australia and the U.S. or differential managerial incentives and firm costs between distressed and bankrupt firms. In light of these differences, an empirical question exists as to whether the results of the Australian studies will obtain in the U.S. We examine the relationship between the propensity of auditors to render GC opinions and nonaudit fees (and other auditor fees) for a sample of bankrupt U.S. firms. We do not observe any association between GC opinions and nonaudit fees, audit fees, total fees, or the ratio of nonaudit fees to total fees.

scholarly journals Internal Auditing Outsourcing, Nonaudit Services and Audit Fees

2021 ◽  
Author(s):  
Effiezal Aswadi Abdul Wahab ◽  
Willie E. Gist ◽  
Ferdinand A. Gul ◽  
Mazlina Mat Zain
Keyword(s):  
Audit Quality ◽  
Negative Relationship ◽  
Audit Fees ◽  
Internal Auditing ◽  
External Audit ◽  
Nonaudit Services ◽  
The Relationship

This study examines the relationship between outsourced internal audits, nonaudit services and audit fees. We use Malaysian data to show that client firms that outsource their internal auditing function (IAF) are associated with lower external audit fees than those with in-house IAF. Moreover, this negative relationship is significantly stronger for firms that purchase greater amounts of nonaudit services (NAS) from the auditor. The results suggest that an auditor who provides NAS to a client and thus earns additional overall revenue is willing to accept lower audit fees provided a high audit quality can be achieved through reliance on outsourced IAFs.

scholarly journals The Effect of Audit Committees on the Sustainability of Financial Inclusion Transactions in Saudi Banks in the Light of the Saudi Vision 2030: أثر لجان المراجعة في استدامة الشمول المالي بالمصارف السعودية في إطار رؤية المملكة 2030م

2021 ◽  
Vol 5 (13) ◽  
pp. 109-90
Author(s):  
Rasha Abdulrhman Fallatah Rasha Abdulrhman Fallatah
Keyword(s):  
Saudi Arabia ◽  
Audit Committee ◽  
Negative Relationship ◽  
Financial Inclusion ◽  
Audit Committees ◽  
Banking Business ◽  
Vision 2030 ◽  
Bank Employees ◽  
The Relationship

This study aims to examine the relationship between the roles of audit committee and the satiability of financial inclusion in banking sectors in Saudi Arabia. The researcher used the descriptive analytical approach to achieve the aims of the study, and the questionnaire was the tool of the study which applied to (60) of bank employees and managers in Saudi Arabia. The results revealed that there is positive relationship between the role of audit committee in Saudis’ banks and the satiability of financial inclusion with (0.003) less than (0.005) While, there are negative relationship between the satiability of financial inclusion and audit committee meetings, experiences, and the independency of audit committee members (0.400), (0.841) (0.105). Directing the interest of Saudi banks towards designing the objectives of the audit committees in a manner consistent with the requirements of the banking business and in accordance with the goals of Vision 2030.

scholarly journals Big Data in Corporate Governance decision

2020 ◽  
Author(s):  
Alfredo Juan Grau Grau ◽  
Inmaculada Bel Oms
Keyword(s):  
Corporate Governance ◽  
Big Data ◽  
Data Analysis ◽  
Panel Data Analysis ◽  
Negative Relationship ◽  
Audit Committees ◽  
Board Structure ◽  
Strong Negative Relationship ◽  
The Usa ◽  
The Relationship

Progress in Big Data in recent years has grown exponentially, which hasallowed the detection and processing of a large amount of data. Until recently,this fact was unattainable by the lack of mechanization of the corporategovernance reports. This paper investigates the relationship betweencorporate governance decisions affect the indebtedness policies of 1,956industrial companies listed in Europe and the USA over the period 2016–2018(5,868 observations). To measure corporate governance decisions, we usedetailed information on the expertise of audit committees, the proportion ofindependent directors, board structures and women's presence on corporateboards. Our findings, which are based on a static panel data analysis, showthat there is a strong negative relationship between Audit Committeesexpertise and indebtedness level in European and North American companies.There are also evidence that European and American companies with a one-tier board structure and Audit Committees expertise are less likely to havelower level of indebtedness. Our results shed new light on corporategovernance in relation to the experience of audit committees and the influenceof their characteristics on indebtedness policy.

Gender diversity in audit committees and audit fees: evidence from China

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Radwan Hussien Alkebsee ◽  
Gao-Liang Tian ◽  
Muhammad Usman ◽  
Muhammad Abubakkar Siddique ◽  
Adeeb A. Alhebry
Keyword(s):  
Audit Committee ◽  
Gender Diversity ◽  
Audit Fees ◽  
Situational Factors ◽  
Audit Committees ◽  
Least Squares Regression ◽  
Content Type ◽  
External Auditors ◽  
Female Directors ◽  
The Relationship

Purpose This study aims to investigate whether the presence of female directors on audit committees affects audit fees in Chinese listed companies. This study also investigates whether the audit committee’s gender diversity moderates the relationship between the firm’s inherent situational factors (e.g. audit complexity and firm risk) and audit fees. Finally, this study investigates whether the effect of the audit committee’s gender diversity on audit fees varies with within-country institutional contingencies (e.g. state-owned enterprises [SOEs] vs non-SOEs and firms that are located in more developed regions vs firms that are located in less developed regions) Design/methodology/approach This study used the data of all A-share listed companies on the Shanghai and Shenzhen stock exchanges for the period from 2009 to 2015. The authors use ordinary least squares regression as a baseline methodology, along with firm fixed effect, Deference in Deference method, two-stage least squares regression, two-stage Heckman model and generalized method of moments models to control for the possible issue of endogeneity. Findings The study’s findings suggest that the presence of female directors on the audit committee improves internal monitoring and communication, which reduce the perceived audit risk and the need for assurances from external auditors. The results also suggest that female directors demand high-quality audits and further assurance from external auditors when the firm is more complex and riskier. In addition, the results suggest that within-country, institutional factors play significant role in shaping the governance role of gender-diverse audit committee. Practical implications The study contributes to the agency theory by providing evidence that the interaction between agency theory and corporate governance “board composition” generates an effective monitoring mechanism and contributing to the institutional theory by finding that role of female directors on audit committee varies from context to another. In addition, this study contributes to literature review of gender diversity in the boardroom by finding the economic benefit of having female directors on audit committee. Finally, this study has implications for policy-makers in promoting regulations to legalize women presence on the board, to external auditors in assessing control risk during planning the audit, to those who responsible for appointing audit committee members. Originality/value The authors extend earlier studies by providing novel evidence on the relationship between gender-diverse audit committees and audit fees in terms of both the supply- and demand-side perspectives; that female directors moderate the relationship between firm inherent situational factors (e.g. audit complexity and firm risk) and audit fees; and that the effect of audit committees’ gender diversity on audit fees varies with sub-national institutional contingencies.

Audit committee attributes and cosmetic accounting in Nigeria

2019 ◽  
Vol 35 (2) ◽  
pp. 177-206
Author(s):  
Hussaini Bala ◽  
Noor Afza Amran ◽  
Hasnah Shaari
Keyword(s):  
Financial Reporting ◽  
Audit Committee ◽  
Negative Relationship ◽  
Reporting Quality ◽  
Audit Fees ◽  
Financial Accounting ◽  
Audit Committees ◽  
Financial Reporting Quality ◽  
Content Type ◽  
Accounting Expertise

Purpose The literature on the influence of audit committees (ACs) and cosmetic accounting (CSA) is scarce. This paper aims to examine the influence of AC attributes on CSA and how this relationship is moderated by the audit price (AUPR). Design/methodology/approach The study used pooled logistic regressions to analyse 624 firm-year observations of listed companies in Nigeria from 2008 to 2016. Findings The results show that AC financial accounting expertise, AC legal expertise and female AC membership were negatively related to CSA. The negative relationship is highly pronounced when a firm incurs higher audit fees. Results for the robustness checks were similar, even with changes to the measurements of dependent and independent variables and alternative estimation. Practical implications This study can benefit policymakers and regulators, enabling them to better appreciate the importance of AC attributes and AUPR in curtailing artificial manipulation and enhancing financial reporting quality. Social implications This study can benefit policymakers and regulators, enabling them to better appreciate the importance of AC attributes and AUPR in curtailing artificial manipulation and enhancing financial reporting quality. Originality/value The findings provide an initial insight into the moderating effect of AUPR on the relationship between AC attributes and CSA.

A Meta-Analysis of Interviews and Cognitive Ability

2013 ◽  
Vol 12 (4) ◽  
pp. 157-169 ◽  
Author(s):  
Philip L. Roth ◽  
Allen I. Huffcutt
Keyword(s):  
Cognitive Ability ◽  
Meta Analysis ◽  
Incremental Validity ◽  
Employment Interviews ◽  
Moderator Analysis ◽  
The Future ◽  
Research Questions ◽  
Meta Analyses ◽  
The Relationship

The topic of what interviews measure has received a great deal of attention over the years. One line of research has investigated the relationship between interviews and the construct of cognitive ability. A previous meta-analysis reported an overall corrected correlation of .40 ( Huffcutt, Roth, & McDaniel, 1996 ). A more recent meta-analysis reported a noticeably lower corrected correlation of .27 ( Berry, Sackett, & Landers, 2007 ). After reviewing both meta-analyses, it appears that the two studies posed different research questions. Further, there were a number of coding judgments in Berry et al. that merit review, and there was no moderator analysis for educational versus employment interviews. As a result, we reanalyzed the work by Berry et al. and found a corrected correlation of .42 for employment interviews (.15 higher than Berry et al., a 56% increase). Further, educational interviews were associated with a corrected correlation of .21, supporting their influence as a moderator. We suggest a better estimate of the correlation between employment interviews and cognitive ability is .42, and this takes us “back to the future” in that the better overall estimate of the employment interviews – cognitive ability relationship is roughly .40. This difference has implications for what is being measured by interviews and their incremental validity.

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