Audit Fees: A Further Evidence of the Role of Financial and Operating Liability Leverage
Mohsen
Imeni
Assistant Prof., Department of Accounting, Ayandegan Institute of Higher Education, Tonekabon, Iran.
author
Abbas Ali
Daryaei
Assistant Prof., Department of Accounting, Imam Khomeini International University, Qazvin, Iran.
author
text
article
2021
per
Objective: The aim of this study is to investigate the relationship between the debt leverage and the audit fees in the Tehran Stock Exchange. We considered the impact of the operating and financial liability leverage variables. In addition, the existing association between the mentioned variables and the audit fees was examined.
Methods: In this research, the statistical population is 113 firms during the periods of 2011 to 2018 years. We used the multivariate regression to examine the relationship between research variables.
Results: Considering the results, the total debt leverage, the financial leverage, and the estimated operating liability leverage have positive and significant nexus with the audit fees. The high liability leverage increases the risk of client failure and the risk of auditor litigation; the auditors react to these risks and increase audit fees. Also there is no tie between changes in all debt leverages and changes in audit fees. The additional tests in study show that the higher level of total debt leverage and the financial leverage in small and large firms raise the audit fees. Since the financial leverage in situation of financial distress is high, the auditors with higher fees decrease the audit risk. Based on the results we can see there is also a positive and significant link between the total debt leverage, the financial leverage, and the estimated operating liability leverage with the abnormal audit fees. As well, the delay's relationship in presentation of the audit report as a measure of the auditor's effort with their interactive effect with leverage has no influence on the audit fees.
Conclusion: This article investigated the Distinction between different types of leverages in audit studies. The results show this paper adds to the existing literature in the accounting and auditing context, particularly, agency theory field. As the higher debt leverage has relation with lower-quality earnings and the higher-risk audit, the conflict of interest occurs between the shareholders and the managers. The auditors have the important role in resolving this conflict of interest by examing the financial statements. According to the findings of this study, it can be suggested that recognizing the different sources of leverages and the distinction between financial and operating leverage is important in auditing research, especially audit fee models. Therefore, the clients and audit firms interested in estimating the audit fees accurately can utilize the appropriate model, that is, this study has provided a unique insight into the literature in the context of audit fees
Accounting and Auditing Review
University of Tehran
2645-8020
27
v.
4
no.
2021
495
522
https://acctgrev.ut.ac.ir/article_80471_9c6160f93909be48b3b76b455416c33b.pdf
dx.doi.org/10.22059/acctgrev.2021.80471
Structural Analysis of the Drivers Affecting the Future of Corporate Reporting in Iran
Jafar
Babajani
Prof., Department of Accounting, Faculty of Management and Accounting, Allameh Tabataba'i University, Tehran, Iran.
author
Morteza
Adlzadeh
Ph.D. Candidate, Department of Accounting, Faculty of Management and Accounting, Allameh Tabataba'i University, Tehran, Iran.
author
text
article
2021
per
Objective: Corporate reporting in its general sense refers to all communication channels between companies and stakeholders and is the main mechanism for transmitting information to users. In recent years, there have been growing concerns about the inadequacy of traditional corporate reporting. This highlights the need to think about the factors that influence the future of corporate reporting. As a result, the purpose of this study is to identify and structural analyze of drivers that affect the future of corporate reporting in Iran.
Methods: In the first stage, in order to identify the list of drivers, semi-structured interviews with experts in the field of corporate reporting (including managers, auditors, regulatory and standard setting body representatives, investors and analysts, and university professors) were used, and then fuzzy Delphi analysis was used to validate and consensus on important drivers. In the second stage, using the cross-impact analysis method using MICMAC software, the structural analysis of the drivers identified in the first stage was performed. At the interview stage and like most qualitative studies, the sample was selected purposefully using a snowball or chain sampling method. This process has continued until the achievement of theoretical saturation about the drivers that affect the future of corporate reporting.In addition, theoretical sampling method was used to distribute the questionnaire and use "fuzzy Delphi" and "interaction matrix" methods. Purposive sampling was used to select a sample to collect data in different stages of the research. In the first phase, 17 interviews were conducted with experts. The first round Delphi questionnaire was distributed among 35 experts and in the second round among 27 respondents of the first stage. Structural analysis questionnaire was redistributed among 35 people in the first stage of Delphi, from which 20 answers were received.
Results: Based on the results of the first phase of the study, 52 drivers were identified in exploratory interviews. After two rounds of fuzzy Delphi implementation, 37 drivers were accepted as important drivers and consensus of experts. In the second stage, after structural analysis of the drivers, the position of each driver was determined as driving variables, linkage variables, dependence variables and autonomous variables.
Conclusion: The results show that the three drivers of "entering the global economic arena, lifting sanctions and expanding ties with foreign investors", "privatization of property" and "development of social networks" have the greatest impact on shaping the future of corporate reporting. The results of this study can be used as a basis for identifying the major trends and forces affecting the future of corporate reporting in Iran and optimal policy in this area. The results of this study are expected to be an effective step in providing a structured and systematic interpretation of the main variables affecting the future of corporate reporting and the relationships between them. In addition to the final drivers enumerated in this study, can be used to analyze and design possible scenarios for corporate reporting.
Accounting and Auditing Review
University of Tehran
2645-8020
27
v.
4
no.
2021
523
545
https://acctgrev.ut.ac.ir/article_80472_00016be83ab5e2fc26892085741afaed.pdf
dx.doi.org/10.22059/acctgrev.2021.80472
A Model for Measuring the Comparability of Financial Statements Based on the Relative Valuation Theory
Ghader
Babaei
PhD Candidate, Department of Accounting, Bonab Branch, Islamic Azad University, Bonab, Iran.
author
Asgar
Pakmaram
Associate Prof., Department of Accounting, Bonab Branch, Islamic Azad University, Bonab, Iran.
author
Younes
Badavar Nahandi
Associate Prof., Department of Accounting, Tabriz Branch, Islamic Azad University, Tabriz, Iran.
author
Nader
Rezaei
Assistant Prof., Department of Accounting, Bonab Branch, Islamic Azad University, Bonab, Iran.
author
text
article
2021
per
Objective: Several stakeholders such as investors, regulators, and researchers all emphasize the importanceoffinancial statement comparability. However, few empirical methods have been developed for measuring financial statement comparability. The main aim of this study is to develop a suitable model for measuring financial statements comparability.
Methods: In order to achieve the goal of the research by relying on the relative valuation theory, the output-based measurement models of de facto financial statements comparability is proposed by using the data gathered from 194 firms during the period of 2009 to 2018.
Results: The research findings show that the new model presented in this study have more explanatory power in comparison with the models proposed by De franco, Kothari & Verdi (2011), which were previously the common pattern for measuring the comparability of financial statements. Among the five versions of selected model, the stock price on earnings per share ratio, stock price on book value per share ratio, stock price at the beginning of the period on earnings per share ratio and the stock price on net sale per share ratio are respectively in the next ranks after the version based on the stock price to operating profit per share ratio, which has the highest explanatory power and the best measurement model according to the validation test results. The research findings in the validation test section also show that the financial statements comparabilitymeasured by all version model based on relative valuation theory has a negative impact on information asymmetry and the idiosyncratic risk, and it has a positive effect on the created shareholders value.
Conclusion: The objective of general-purpose financial reporting is to provide users with information that enables them to assess the amount, timing, and uncertainty of a firm’s future net cash flow. Comparability is a unique qualitative characteristic of financial information that enhances its usefulness. Comparability enables users to make sharper inferences about economic similarities and differences across comparable firms so that investors can better understand and evaluate firm performance. Comparability is particularly important to investors in the equity and debt markets, since their investing and lending decisions essentially involve evaluations of alternative opportunities or projects and these decisions cannot be made without comparable information. Therefore, firm’s financial reporting comparability can lower users’ information acquisition and processing costs and increase the quality of financial information. The model presented in this study, by removing some limitations of previous models, has considered more comprehensive dimensions of the comparability of financial statements. The use of this model drives the decisions of capital market activists more and more towards fundamental analysis and increases the efficiency of the capital market.
Accounting and Auditing Review
University of Tehran
2645-8020
27
v.
4
no.
2021
546
580
https://acctgrev.ut.ac.ir/article_80473_589a00f9f9867898602bf083923292f9.pdf
dx.doi.org/10.22059/acctgrev.2021.80473
The Role of Managers' Ability and Smoothing Dividends in Changing the Information Content of Current Earnings
Mohsen
Rashidi
Assistant Prof., Department of Accounting, Faculty of Management and Economics, Lorestan University, Khorramabad, Iran.
author
Ebrahim
Ebrahimi
PhD, Department of Accounting, Faculty of Management, University of Tehran, Tehran, Iran.
author
text
article
2021
per
Objective: The desire to change the dividend payment method can indicate the ability of managers to control fluctuations in the capital market, so that managers limit changes in dividends to cover the risk of these fluctuations. In this research, the aim is to investigate the role of managers' ability and dividends smoothing in changing the information content of current earnings.
Methods: For this purpose, data related to 120 companies listed on the Tehran Stock Exchange for the period 2008 to 2019 has been extracted and the combined data regression model has been used to test research hypotheses.
Results: The results indicate the confirmation of the first and second hypotheses of the research. In other words, the research results indicate that the ability of managers leads to increased dividends smoothing. In addition, the results of the second hypothesis of the research indicate a significant relationship between the managers’ ability and the information content of dividends smoothing.
Conclusion: Managers with high ability are more inclined n deliberately smooth dividends, and this smoothness relates to the company's future profitability. Managers with high ability provide information about the future earnings in the form of smoothing current dividends, given their skills in forecasting and estimating future performance.
Accounting and Auditing Review
University of Tehran
2645-8020
27
v.
4
no.
2021
581
603
https://acctgrev.ut.ac.ir/article_80474_f0fdef9fdbccc5164643bc348ccaf296.pdf
dx.doi.org/10.22059/acctgrev.2021.80474
Bases and Grounds of Accountant’s Ethical Evaluation of Fraud: Religion, Philosophy and Environment Viewpoints
Nasim
Shahmoradi
Assistant Prof., Department of Accounting, Yazd Branch, Islamic Azad University, Yazd, Iran.
author
text
article
2021
per
Objective: Companies have various organizational structures and individuals without very strong ethical orientation may succumb to the unethical practices which causes fraud in such workplaces. The aim of this study is to investigate the environmental, philosophical, and religious factors of accountant’s ethical evaluation of fraudin accounting profession.
Methods: In this study, religiosity in three dimensions of personal, social life, and morality has been investigated. Additionally, environmental conditions in two aspects of intrinsic and extrinsic factors and philosophical views of machiavellianism and utilitarianism have been chosenand their effects on ethical evaluation of fraud in four dimensions have been examined.The research data to test hypotheses is collected from 300 questionnaires filled by accountants in spring of 2020and analyzed by structural equation modeling using LISREL software.
Results: The findings show inverse effect of religiosity in morality on fraudin companies, while religiosity in social andpersonal life have no significant effect. Besides that, machiavellianism and utilitarianism views have positive and significant effects on ethical evaluation of fraud in accounting, moreover, intrinsicand extrinsic grounds of accountants ’ethical evaluation have no significant effect.
Conclusion: The evidence confirms that religiosity in morality and philosophical bases have positive effects on ethical evaluation of fraud while intrinsicand extrinsic grounds have no significant effect, so it can be concluded that to reduce and prevent fraud, factors affecting the individuality of accountants such asreligiosity in morality and philosophy are very important and should be considered.
Accounting and Auditing Review
University of Tehran
2645-8020
27
v.
4
no.
2021
604
623
https://acctgrev.ut.ac.ir/article_80475_8f7391854d6f06d1898f6a9aff46c0df.pdf
dx.doi.org/10.22059/acctgrev.2021.80475
A Survey on the Effect of Auditing Firm’s Size and the Organizational Level of Auditors on the Ethical Reasoning at Different Stages of Kohlberg's Theory of Cognitive Moral Development
Mohammad Hossein
Safarzadeh Bondari
Assistant Prof., Department of Accounting, Faculty of Management and Accounting, Shahid Beheshti University, Tehran, Iran.
author
Mohammad
Arab Mazar Yzadi
Associate Prof., Department of Accounting, Faculty of Management and Accounting, Shahid Beheshti University, Tehran, Iran.
author
Abbas
Hooshmand Kashani
MSc., Department of Accounting, Faculty of Management and Accounting, Shahid Beheshti University, Tehran, Iran.
author
text
article
2021
per
Objective: This study is designed to investigate the effect of auditing firm’s size and the organizational level of auditors on the ethical reasoning at different stages of Kohlberg's theory of cognitive moral development. Methods: This study is a descriptive survey. A questionnaire containing a scenario was used to collect research data. 355 questionnaires were collected at 2020 from auditors working in private audit firms and the Audit Organization. Data were analyzed using descriptive statistics and regression analysis. Results: The present study has three main findings: The first shows that the ethical reasoning of Iranian auditors is at the post-contractual level of Kohlberg’s theory. The second indicates a negative relationship between the levels of ethical reasoning and the size of audit firms, and finally the last finding shows that with improving auditors' position in audit firms, their levels of ethical reasoning decreases. Conclusion: The results indicate that the size of the auditing firms and the organizational level of auditors affect on their ethical reasoning. The findings of this study can help policy makers and legislators to avoid the potential risk of negligence by auditors.
Accounting and Auditing Review
University of Tehran
2645-8020
27
v.
4
no.
2021
624
648
https://acctgrev.ut.ac.ir/article_80476_d78455f604e9dea1d24dc6659f96b4e3.pdf
dx.doi.org/10.22059/acctgrev.2021.80476
The Effect of CEO Narcissism on Voluntary Disclosure
Shahnaz
Mashayekh
Associate Prof., Department of Accounting, Faculty of Economics and Social Sciences, alzahra University, Tehran, Iran.
author
Malihe
Habibzade
PhD Candidate, Department of Accounting, Faculty of Economics and Social Sciences, alzahra University, Tehran, Iran.
author
Mahmood
Hasanzade Kucho
MSc., Department of Accounting, Qom University, Qom, Iran.
author
text
article
2021
per
Objective: Previous research has shown that providing voluntary and discretionary information by companies can help reduce investor risk. But providing this information depends on the decisions of managers. Therefore, the purpose of this study is to investigate the effect of manager’s narcissism on voluntary disclosure of company information. Methods: With the use of data gathered in the time period of 1388 to 1397 from 135 companies listed on the Tehran’s Stock Exchange, the hypotheses tests have been performed using multiple regression. Results: After doing statistical analysis on CEO narcissism on voluntary disclosure of company information, the result of the hypotheses show that it has a significant and meaningful negative effects. In this study, two indicators including: “the ratio of manager’s rewards to total salaries” and “the size of manager’s signatures” have been used to measure manager’s narcissism. According to the result of the study, in companies where the ratio of manager’s bonuses is paid a higher percentage than other managers in other companies, as well as managers who have a larger signature size, discretionary disclosure of information is less. Conclusion: The personality traits of narcissistic managers, compared to other managers, lead them to take actions that are out of the ordinary and seek the attention and praise of others, and the these actions will untimely affect the performance of the organization. Therefore, personal prejudices and positive illusions of narcissistic managers affect the supply of financial information to the stock exchange, and therefore, these managers tend to ignore confidential negative feedback and will provide information about the company’s performance when communicating with the shareholders despite of considering the reality of the matter. In addition these managers may knowingly miss present information to convince investors that ongoing projects have promising future. Thus, the occurrence of this phenomenon among managers will cause them to try to reduce the disclosure of voluntary information to investors and other shareholders by using different methods.
Accounting and Auditing Review
University of Tehran
2645-8020
27
v.
4
no.
2021
649
671
https://acctgrev.ut.ac.ir/article_80477_41b12cf6ec0d076920a17aa1f843a6be.pdf
dx.doi.org/10.22059/acctgrev.2021.80477