Iranian Journal of Accounting, Auditing and Finance

Iranian Journal of Accounting, Auditing and Finance

The Relationship between Auditor’s Narcissism and Expectation Gap with Audit Fees: Evidence from an Emerging Market

Document Type : Original Article

Authors
Safoura Rouhi 1
Somaye Delgosha khadar 2
1 Accounting, Management and Accounting, Khayyam Higher Education Institute Of Mashhad, Mashhad, Iran
2 Accounting, Management Accounting, Khayyam Higher Education Institute Of Mashhad, Mashhad, Iran
10.22067/ijaaf.2021.70386.1026
Abstract
The present study aims to assess the relationship between auditor’s narcissism, expectation gap, and audit fee in listed firms on the Tehran Stock Exchange. In other words, this study attempts to answer the question of “whether a narcissistic auditor contributes to the expectation gap and the amount of fee or not.” The multivariate regression model is used for hypothesis testing. The study's hypotheses were also tested using a sample of 768 listed year-firm on the Tehran Stock Exchange during 2012-2017 by applying the panel data approach and employing the fixed effects model. The obtained results also indicate that there is a positive and significant relationship between auditor’s narcissism and expectation gap and a negative and significant relationship exists between auditor’s narcissism and audit fee, which means that the increase of narcissistic features in an auditor would increase the expectation gap between auditor and users. In contrast, the presence of such features in the auditor affects its payment. Moreover, the results of hypothesis testing show that there is a negative and significant relationship between auditor change and audit expectation gap. This study utilized an empirical model for evaluating the audit expectation gap and the variable of signature magnitude for measuring narcissism. Further, this paper is the first study to assess such a relationship. Hence, the present study contributes to developing science and knowledge in this field and helps lawmakers present more effective standards and regulations based on society's needs and the obtained results.
Keywords
auditor’s narcissism
audit fee
audit expectation gap
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