Purpose This paper aims to investigate the effects of some corporate governance mechanisms and executive compensation on audit fees in an emerging market. Design/methodology/approach The study population consists of 540 observations and 90 listed companies on the Tehran Stock Exchange during the years 2009-2014. The statistical model used in this study is a multivariate regression model; besides, the statistical technique used to test the hypotheses proposed in this research is panel data. Findings The changes in the value of a CEO’s own firm stock option portfolio, in thousands of rials (Iran’s currency), for a 0.01 change in stock return volatility and stock price are defined as Vega and Delta, respectively. The results demonstrated that there is a positive association between audit fees and delta, but not Vega; this means that a fee premium is linked to CEO Delta incentives. The findings show that Iranian companies pay more audit fees when they give managers more rewards. In addition, the results show that there is not a significant relationship between fees resulting from audit risk and Delta and Vega incentives of the board. Inconsistent with agency theory, the authors found that the independence of board members did not have any effect on audit fees. As a final point, the outcomes of the paper demonstrate that managers who invest in companies under their own management do not have any impact on the amount of audit fee. To put it another way, there is not any significant connection between the board ownership and audit fees. Practical implications This is one of the most important studies that simultaneously surveys the impacts of corporate governance mechanisms and executive compensation in the Iranian audit market. The results of this study will reveal more than the role of corporate governance mechanisms for society and users of financial statements because as tools on the CEO actions, they always have to pay attention to the implementation of corporate principles in the economic entity’ operation. Originality/value The present study has examined the relationship between two cases of corporate governance mechanisms named the board independence and the board ownership with audit fees in a country where, to the authors’ knowledge as in most other developing markets, such a relationship has not been a subject of empirical research. Moreover, the use of a two-dimensional measure of executive compensation, namely, Delta and Vega incentives, primarily considering research undertaken in an emerging market, as a valuable contribution may be observed.

Purpose The purpose of this paper is twofold: first, to investigate the relationship between some characteristics of corporations including firm size, financial leverage, profitability, firm age and the type of industry with social responsibility disclosure of firms listed on Tehran Stock Exchange (TSE); and second, to study the association between the level of corporate social responsibility disclosure (CSRD) and some of the audit variables such as audit fees, audit tenure and audit firm’ size. Design/methodology/approach The study population consists of 125 firms listed on the TSE during the years 2010–2015. Following Salehi et al. (2017), content analysis is used to measure the level of social responsibility disclosure, and hypotheses are performed using multiple regression analysis and R software. Findings The results represented that there is a positive significant relationship between a firm size and a firm age with the level of CSRD. However, there is a negative significant association between financial leverage and profitability with the level of CSRD. Given that CSRD is different among various industries and the type of industry can be an influential factor in CSRD, an industry type’ variable in the fourth hypothesis is of a type of index variable and has eight levels, of which the first level is ranked as the base level. Our findings showed that the level of CSRD at industries of machinery and appliances, production of metal products, food and beverage products, and textiles is lower than the baseline level (pharmacy). Nevertheless, companies in the fifth industry (mineral products) have a higher level of CSRD in comparison with the pharmacy industry. Moreover, the authors find that there is a significant positive connection between audit fees and CSRD. This implies that Iranian managers in an inflationary economy probably manage earnings when they provide more CSRDs, which leads to increase in the audit risk and audit fees. Practical implications Needless to say, the findings of this paper will have practical implications for investors, auditors and other users of financial statements. First of all, this study will aware them of the fact that when a country faces economic sanctions and most of its companies are in financial strain investors should not consider the firms engaging in corporate social responsibility activities to behave morally and provide transparent financial reports. Second, the results will convince auditors to be conservative toward the firms that are financially distressed, for audit risk of them will be high. Thus, policymakers should be cautious concerning directors’ opportunistic actions and increase monitoring to enforce social obedience. Originality/value The turning point of this research is related to the time period of research related to firms that have faced severe financial problems due to economic sanctions. In fact, the study revealed another aspect of CSRD that could have negative consequences when managers are in financial strain and take opportunistic actions.

Purpose This study aims to examine the effect of the structure of board of directors and company ownership on social responsibility disclosure of listed companies on the Tehran Stock Exchange. Design/methodology/approach The variables of the study included independent board of directors, institutional ownership, managerial ownership, family ownership and family-managerial ownership. The study population consisted of 125 listed companies on the Tehran Stock Exchange during the years 2009-2014. Content analysis used to measure social responsibility disclosure level and test hypothesis was performed using multiple regression analysis. Findings The results demonstrated that there was no significant relationship between any of the independent variables and the level of social responsibility disclosure. This study empirically shows managers, investors and other stakeholders that if business owners are made of different groups, namely, institutional ownership, managerial and family ownership, it will not affect the social responsibility disclosure in annual reports. Originality/value The outcomes of the current study may bridge the gap between social responsibility disclosure and ownership structure in a developing country like Iran.

Purpose The purpose of this paper is to evaluate the qualitative effect of corporate governance components, in the form of managerial entrenchment index, on earnings management and innovation. Design/methodology/approach In this study, the variable of managerial entrenchment, which includes the variables of management independence, dual role of management, management tenure, the board compensation and the board ownership percentage, was initially estimated through the exploratory factor analysis and its effect was evaluated on the dependent variables of the study using the test of multivariable regressions. Hence, a total of 103 listed companies on the Tehran Stock Exchange were selected and analyzed during 2011–2016. In this paper, the Jones model is used as the variable of accrued earnings management and for calculating the real earnings management, the models of abnormal operational cash flows, abnormal production costs and abnormal optional costs are employed. Moreover, the research and development cost to total costs ratio is used for calculating the innovation. Findings The results indicate a negative and significant relationship between managerial entrenchment and accrual-based earnings management; moreover, the entrenched managers are less likely to engage in manipulating the real activities accruals in Iran context. Furthermore, the findings show that there is a positive and significant relationship between managerial entrenchment and firm innovation. Originality/value What really sets this paper apart from other studies is that this research will make aware investors and stakeholders of this fact that managerial entrenchment will be a good way to diminish the manipulation of financial reporting and improve the corporate situation in emerging markets, particularly those bazaars facing with economic sanctions such as Iran. Undeniably, the study results will complete the knowledge gap between the developed economies and the emerging markets.

Purpose The purpose of this paper is to evaluate the relationship between the characteristics of the audit committee and the board and profitability among the companies listed on the Tehran Stock Exchange (TSE) in Iran. Design/methodology/approach In this study, the companies listed on the TSE during the period from 2010 to 2015 are investigated. The Linear panel regression method is employed for this purpose. The independent variables of the study are composed of some corporate governance mechanisms including audit committee size, audit committee expertise, board size, board independence, chief executive officer (CEO) duality, and institutional ownership. Findings In spite of the fact that there does not exist any significant association between audit committee size and corporate financial performance, the results indicate that there is a positive and significant relationship between audit committee financial expertise and profitability. The authors found that the number of board members cannot affect corporate performance; moreover, duality of CEO role in Iranian companies does not affect company performance. However, the outcomes showed a positive and significant association between the proportion of outside directors on the board (board independence) and profitability at 99 percent confidence level. This implies that the role of non-executive directors in Iran is inconsistent with the stewardship theory. This is due to the fact that independent directors understand the status of business and market better than the board’s executive members. Finally, the results indicated that there is no significant association between institutional owners and Iranian companies’ performance. Practical implications The findings of this study will reveal more than ever the role of corporate governance mechanisms for society and users of financial statements because as tools on the CEO actions, they always have to pay attention to the implementation of corporate principles in the economic entity’ operation. Originality/value This is one of the most important studies that simultaneously examine the impacts of characteristics of the audit committee and the board on profitability in an emerging market, and the results of the study may give strength to Iranian as well other developing countries.

Purpose The purpose of this study is to shed further light on the characteristics of an audit committee (AC) and its probable relationship with the quality of financial reporting and disclosure. Based on the findings of extant research that there are different factors that may have implications for the AC’ effectiveness, the authors posit an association between the aforementioned financial aspects and AC presence. Design/methodology/approach The authors test their hypotheses by performing panel data analysis on a sample of 100 companies listed on the Tehran Stock Exchange (TSE) during 2013-2014. The tests were conducted by using Eviews software. Findings Examining previously tested characteristics of an AC, the authors indicate that the number of AC meetings held during fiscal year is negatively associated with the quality of corporate disclosure, whereas AC expertise and size are positively associated with the quality firm’s financial disclosure. Their findings are also indicative of a non-significant relationship between other AC attributes and financial reporting quality (FRQ) except for AC independence, which is positively associated with FRQ. Finally, they provide some evidence that the size of a firm positively affects the quality of its financial reporting and disclosure. Research limitations/implications Although the study has been thoroughly considered and cautiously planned, some limitations have yet arisen. Initially, this research was conducted in an Iranian setting where the formation of ACs is on the verge of regulation; therefore, the data utilized for the study only contains the two-year period of ACs’ statutory activity. In addition, a lack of consensus on the precise measures of an AC’s effectiveness could be considered as a restrictive factor. Originality/value The authors’ study contributes to the AC literature by providing empirical evidence of an association between ACs’ different attributes and financial aspects in a newly regulated environment like the TSE. The results provided in this paper could be fruitful for auditors, regulators, institutional investors and policymakers.

The main objective of an accounting information system (AIS), a pre-eminently user-oriented system, is the collection and recording of data and information regarding events that have an economic impact upon organizations and the maintenance, processing and communication of information to internal and external stakeholders. The results of this study show that although AIS is very useful to Iranian corporation, it is a gap between what AIS is and what should be.

Purpose The purpose of this paper is to demonstrate a deeper understanding about the reasons behind difference in previous studies’ results in the field of audit quality determinants. Design/methodology/approach A meta-analysis method is employed in which 52 studies including 40 international studies from authentic scientific articles during the year 2000–2015 and 12 national studies out of authentic national scientific articles from 2001 to 2015 are taken to account as sample studies. Audit firm size, auditor tenure and auditor specialization are set as independent variables and audit quality is the only dependent variable in the current paper. Findings The results indicate that audit firm size and auditor specialization are positively associated with audit quality. In other words, contracting with larger audit firm and specialized auditor results in delivering higher quality audit services. Originality/value The current study is the first study to be conducted in the field of audit quality determinants. The results may be beneficial both for standard setters as well practitioners in a way that it provides evidence that contributes to basis policy and audit-standard makers about domination and determinants of audit quality.