The impact of CEOs' Ethnic characteristics on audit report lags and audit fees in Iran

Document Type : Original Article

Authors

Faculty of Economics and Business Administration, Ferdowsi University of Mashhad, Mashhad, Iran

Abstract

Purpose – Timeliness in financial reporting is so important that it is mentioned in accounting conceptual framework as qualitative characteristics of accounting information. In this research, it is tired to consider a new attitude in accounting research in the field of audit report lag and audit fees.
Design/Methodology/Approach– The study used the data from listed companies on the Tehran Stock exchange during 2009 -2015.
Findings – The findings show that there is a significant relationship between audit report lag and variables including type of audit firm, number of Basis for Modification Paragraphs, audit opinion and ROA. Also there is a significant relationship between audit fees and variables including audit firm change during the fiscal year, type of audit firm, number of basis for modification paragraphs, CEO’s educational degree and company size.
Originality/value – The results of the current study may give more information about the fluctuation of audit fees in developing nations.

Keywords


Abbott, L. J., Parker, S., Peters, G. F., & Raghunandan, K. (2003). An empirical investigation of audit fees, nonaudit fees, and audit committees. Contemporary Accounting Research, 20(2), 215-234.
Agung, I. G. N. (2013). Panel Data Analysis Using EViews: John Wiley & Sons.
Ahmadi, S. A., & Jaafari, S. (2015). Study of contexts on convergence and divergence among Iranian ethnic groups. Paper presented at the The 8th Congress of Iranian Geopolitics Association Empathy between the Iranian Ethnic Groups, National Integrity and Solidarity, Iran, Sanandaj.
Akrami, S. M., Bastani, A., Modarresi, M. H., Reyhani, F., & Karimi Rad, V. (2012). Genes or Environment; which one specifies our Future. The Iranian Journal of Bioethics, 2(4), 181-192.
Al-Ajmi, J. (2008). Audit and reporting delays: Evidence from an emerging market. Advances in Accounting, 24(2), 217-226.
Ames, D., Seifert, D. L., & Rich, J. (2015). Religious Social Identity and Whistle-Blowing Research on Professional Responsibility and Ethics in Accounting (pp. 181-207): Emerald Group Publishing Limited.
Amirkafi, M., & Hajiani, E. (2013). Relationship between ethnic and national identities in Iran's multiethnic society: study and comparison of three theoretical approaches. Rahbord, 22(66), 117-146.
Apadore, K., & Noor, M. M. (2013). Determinants of audit report lag and corporate governance in Malaysia. International Journal of Business and Management, 8(15), 151.
Ashton, R. H., Graul, P. R., & Newton, J. D. (1989). Audit delay and the timeliness of corporate reporting. Contemporary Accounting Research, 5(2), 657-673.
Ashton, R. H., Willingham, J. J., & Elliott, R. K. (1987). An empirical analysis of audit delay. Journal of Accounting Research, 275-292.
Azad Armaki, T., & Momtaz Jahromi, N. (2014). Study of social values in different ethnicities Ahwaz and provide management solutions to enhance its. Journal of Cultural Management, 7(22), 31-51.
Balaban, E., Benjamin, J., Ebstein, R., & Belmaker, R. (2002). Human correlative behavioral genetics: an alternative viewpoint (pp. 293-314): American Psychiatric Publishing, Inc.
Baltagi, B. (2008). Econometric analysis of panel data: John Wiley & Sons.
Baskerville-Morley, R. F. (2005). A research note: the unfinished business of culture. Accounting, Organizations and Society, 30(4), 389-391.
Baskerville, R. F. (2003). Hofstede never studied culture. Accounting, Organizations and Society, 28(1), 1-14.
Baskerville, R. F., Jacobs, K., Lautour, V. J. d., & Sissons, J. (2016). Ethnicity as inclusion and exclusion: Drawing on concept and practice in accounting research. Accounting, Auditing & Accountability Journal, 29(8), 1262-1269. doi: doi:10.1108/AAAJ-07-2016-2643
Baskerville, R. F., Wynn-Williams, K., Evans, E., & Gillett, S. (2014). Researching ethnicity in the Pacific Region. Pacific Accounting Review, 26(3), 302-323.
Beri, M. H. (2015). Corporate governance and audit lag in Nigerian quoted companies. (Master of Science Thesis), Universiti Utara Malaysia.
Bryan, D. B., & Mason, T. W. (2016). Extreme CEO pay cuts and audit fees. Advances in Accounting, 33, 1-10.
Burgess, R. G. (1986). Key variables in social investigation. London: Routledge & Kegan Paul.
Carcello, J. V., Hermanson, D. R., Neal, T. L., & Riley, R. A. (2002). Board characteristics and audit fees. Contemporary Accounting Research, 19(3), 365-384.
Carslaw, C. A., & Kaplan, S. E. (1991). An examination of audit delay: Further evidence from New Zealand. Accounting and Business Research, 22(85), 21-32.
Chan, P., Ezzamel, M., & Gwilliam, D. (1993). Determinants of audit fees for quoted UK companies. Journal of Business Finance & Accounting, 20(6), 765-786.
CIA-WorldFactbook. (2012). Ethnicities and religions in Iran.
Corbella, S., Florio, C., Gotti, G., & Mastrolia, S. A. (2015). Audit firm rotation, audit fees and audit quality: The experience of Italian public companies. Journal of International Accounting, Auditing and Taxation, 25, 46-66.
Desai, H., Hogan, C. E., & Wilkins, M. S. (2006). The reputational penalty for aggressive accounting: Earnings restatements and management turnover. The Accounting Review, 81(1), 83-112.
Diba Vajari, M., Shafia abadi, A., Esmaeeli, M., & Karami, A. (2012). Comparison of the multicultural counseling competencies of Tehran’s counselors with different ethnicity in dimensions of knowledge, awareness and skill. Journal of Research in Psychological Health, 6(3), 40-49.
Duellman, S., Hurwitz, H., & Sun, Y. (2015). Managerial overconfidence and audit fees. Journal of Contemporary Accounting & Economics, 11(2), 148-165.
Ettredge, M. L., Scholz, S., & Li, C. (2007). Audit fees and auditor dismissals in the Sarbanes-Oxley era. Accounting Horizons, 21(4), 371-386.
FASB. (2008). Statement of Financial Accounting Concepts No. 2 Qualitative Characteristics of Accounting Information.
Fearon, J. D. (2003). Ethnic and Cultural Diversity by Country*. Journal of Economic Growth, 8(2), 195-222. doi: 10.1023/a:1024419522867
Finucane, M. L., Slovic, P., Mertz, C. K., Flynn, J., & Satterfield, T. A. (2000). Gender, race, and perceived risk: The'white male'effect. Health, risk & society, 2(2), 159-172.
Flynn, J., Slovic, P., & Mertz, C. K. (1994). Gender, race, and perception of environmental health risks. Risk analysis, 14(6), 1101-1108.
Gholipour, A., & Pourezzat, A. A. (2009). A review on the role of media in analyzing and managing latent social crises: management of ethnic groups. Quarterly Journal of Communication Research, 15(56), 29-46.
Gitman, L. J., & Zutter, C. J. (2012). Principles of managerial finance (Thirteenth ed.): Prentice Hall.
Godfrey, J., Hodgson, A., Tarca, A., Hamilton, J., & Holmes, S. (2010). Accounting theory: Wiley.
Goodwin‐Stewart, J., & Kent, P. (2006). Relation between external audit fees, audit committee characteristics and internal audit. Accounting & Finance, 46(3), 387-404.
Gray, S. J. (1988). Towards a theory of cultural influence on the development of accounting systems internationally. Abacus, 24(1), 1-15.
Griffin, P. A., & Lont, D. H. (2011). Audit fees around dismissals and resignations: Additional evidence. Journal of Contemporary Accounting & Economics, 7(2), 65-81.
Griffin, P. A., Lont, D. H., & Sun, Y. (2008). Corporate governance and audit fees: Evidence of countervailing relations. Journal of Contemporary Accounting & Economics, 4(1), 18-49.
Gujarati, D. (2014). Econometrics by example: Palgrave Macmillan.
Habib, A., & Hossain, M. (2013). CEO/CFO characteristics and financial reporting quality: A review. Research in Accounting Regulation, 25(1), 88-100.
Hajiyani, E. (2009). Relationship between national and ethnic identities among Iranian ethnic groups. Iranian Journal of Sociology, 9(3-4), 143-164.
Harjoto, M. A., Laksmana, I., & Lee, R. (2015). The impact of demographic characteristics of CEOs and directors on audit fees and audit delay. Managerial Auditing Journal, 30(8/9), 963-997. doi: doi:10.1108/MAJ-01-2015-1147
Hassan, Y. M. (2016). Determinants of audit report lag: evidence from Palestine. Journal of Accounting in Emerging Economies, 6(1), 13-32.
Hay, D. C., Knechel, W. R., & Wong, N. (2006). Audit fees: A Meta‐analysis of the effect of supply and demand attributes. Contemporary Accounting Research, 23(1), 141-191.
Hillman, A. J., Cannella, A. A., & Harris, I. C. (2002). Women and racial minorities in the boardroom: How do directors differ? Journal of Management, 28(6), 747-763.
Ho, S., & Hutchinson, M. (2010). Internal audit department characteristics/activities and audit fees: Some evidence from Hong Kong firms. Journal of International Accounting, Auditing and Taxation, 19(2), 121-136.
Hofstede, G. (1983). Dimensions of national cultures in fifty countries and three regions. Expiscations in cross-cultural psychology, 335-355.
Hofstede, G. (1984). Culture's consequences: International differences in work-related values (Vol. 5): sage.
Huang, G., Fowler, C. J., & Baskerville, R. F. (2016). Entering the accounting profession: the operationalization of ethnicity-based discrimination. Accounting, Auditing & Accountability Journal, 29(8), 1342-1366. doi: doi:10.1108/AAAJ-07-2015-2153
Jalali, D., Ghasemi Pir Palooti, M., & Tayebeh, S. (2015). A comparative study of personality characters among university students from some Iranian ethnicities. Journal of Personality and Individual Differences, 4(8), 69-100.
Kalelkar, R., & Khan, S. A. (2016). CEO Financial Background and Audit Pricing. Accounting Horizons.
Leventis, S., & Caramanis, C. (2005). Determinants of audit time as a proxy of audit quality. Managerial Auditing Journal, 20(5), 460-478.
Lowensohn, S., Johnson, L. E., Elder, R. J., & Davies, S. P. (2007). Auditor specialization, perceived audit quality, and audit fees in the local government audit market. Journal of Accounting and Public Policy, 26(6), 705-732.
LUO, W. (2012). Determinants and implications of audit reporting lags in China.
Masli, A., Peters, G. F., Richardson, V. J., & Sanchez, J. M. (2010). Examining the potential benefits of internal control monitoring technology. The Accounting Review, 85(3), 1001-1034.
Mitchell, S. L., & Dell, D. M. (1992). The relationship between Black students' racial identity attitude and participation in campus organizations. Journal of College Student Development, 33, 39-43.
Moazam Khan, M., & ul Haq, A. (2015). Quality and Audit Fees: Evidence from Pakistan. Research Journal of Finance and Accounting, 6(7), 1-11.
Molla Imeny, V., & Marfou, M. (2015). The relationship between disclosure quality and audit report lag. Empirical Studies in Financial Accounting Quarterly, 12(45), 51-71.
Nassaj, H. (2009). Globalization and Iranian ethnic identity with a focus on language and customs. Research in Theoretical Politics, 1(5), 129-156.
Ng, E. S., & Sears, G. J. (2010). What women and ethnic minorities want. Work values and labor market confidence: A self-determination perspective. The International Journal of Human Resource Management, 21(5), 676-698.
Ng, P. P., & Tai, B. Y. (1994). An empirical examination of the determinants of audit delay in Hong Kong. The British Accounting Review, 26(1), 43-59.
Omidi, A., & Rezaei, F. (2010). The political and cultural impacts of globalization on Iranian ethnic groups (A field study on Azeri, Arab, Kurd and Baluch students). PIZHUHISH-I SIYASAT-I NAZARI: RESEARCH IN POLITICAL SCIENCE, 8, 141-170.
Park, S. H., & Westphal, J. D. (2013). Social discrimination in the corporate elite how status affects the propensity for minority CEOs to receive blame for low firm performance. Administrative Science Quarterly, 58(4), 542-586.
PCAOB. (2006). Staff Questions and Answers: Adjustments to Prior-period Financial Statements Audited by a Predecessor Auditor.
PCAOB. (2015). Concept Release on Audit Quality Indicators.
Pishgahi Fard, Z., & Omidi Avaj, M. (2009). Relationship between Iranian ethnic dispersion and borders security. International Quarterly of Geopolitics, 5(14), 48-71.
Pizzini, M., Lin, S., & Ziegenfuss, D. E. (2014). The impact of internal audit function quality and contribution on audit delay. Auditing: A Journal of Practice & Theory, 34(1), 25-58.
Pourali, M., Jozi, M., Rostami, K. H., Taherpour, G., & Niazi, F. (2013). Investigation of effective factors in audit delay: evidence from Tehran Stock Exchange (TSE). Research Journal of Applied Sciences, Engineering and Technology, 5(2), 405-410.
Raghunandan, K., & Rama, D. V. (2006). SOX Section 404 material weakness disclosures and audit fees. Auditing: A Journal of Practice & Theory, 25(1), 99-114.
Rainsbury, E. A., Bradbury, M., & Cahan, S. F. (2009). The impact of audit committee quality on financial reporting quality and audit fees. Journal of Contemporary Accounting & Economics, 5(1), 20-33.
Scott, W. R. (2012). Financial accounting theory (sixth ed.): Pearson Canada.
Selby, E. A., & Joiner, T. E. (2008). Ethnic variations in the structure of borderline personality disorder symptomatology. Journal of Psychiatric Research, 43(2), 115-123.
Simunic, D. A. (1980). The pricing of audit services: Theory and evidence. Journal of Accounting Research, 161-190.
Taghizadeh, M. A., Khoshkonesh, A., Zademohamadi, A., & Habibi, M. (2014). Comparison of Ethnic Identity and Subjective Well-Being in Iranian Ethnicities. Social Welfare Quarterly, 14(52), 135-158.
Taleb, M., & Goudarzi, M. (2004). Ethnicity and Gender: A study of ethnic groups in Sistan and Baluchestan. Women in Development & Politics, 2(1), 23-48.
Vinten, G., Leventis, S., & Caramanis, C. (2005). Determinants of audit time as a proxy of audit quality. Managerial Auditing Journal, 20(5), 460-478.
Wolk, H. I., Dodd, J. L., & Rozycki, J. J. (2008). Accounting theory: conceptual issues in a political and economic environment (Vol. 2): Sage.
Wysocki, P. (2010). Corporate compensation policies and audit fees. Journal of Accounting and Economics, 49(1), 155-160.
Xie, Z., Cai, C., & Ye, J. (2010). Abnormal Audit Fees and Audit Opinion–Further Evidence from China's Capital Market. China Journal of Accounting Research, 3, 51-70.
Yan, Y.-C., & Wheatley, C. M. (2010). New Executives and Audit Fees. Available at SSRN 1626205.
Young, M. (2013). Cultural Influences on Accounting and Its Practices. Senior Honors Theses, Paper 382.
Yousofi, A., & Asgharpoor Masole, A. (2010). Ethnocentrism and its effect on interethnic relationships in Iran A secondary analysis. Historical Sociology, 1(1), 125-144.
Zareh Shahabadi, A., & Amini, k. (2010). Survey the effect of ethnicity in violence against women in Takab city. Nazm Va Amniyat-e Entezami, 3(1), 53-78.
CAPTCHA Image