Corporate Risk Disclosure and Audit Fee: A Text Mining Approach

Yang, Rong; Yu, Yang; Liu, Manlu

doi:10.1080/09638180.2017.1329660

Cited by 80 publications

(61 citation statements)

References 29 publications

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“…Specifically, it documents empirical evidence on the association of annual report attributes with audit pricing decisions, which constitutes a logical extension to prior studies that examined the link between annual report tone and financial reporting. Second, within the auditing literature, the study extends the findings of Yang et al () which show the link between client‐identified risks in narrative disclosures and audit fees. Whereas Yang et al () examined risks that clients are required to explicitly disclose in annual report narratives in the USA, we focus on a broader linguistic attribute of annual reports in a voluntary disclosure environment.…”

Section: Introductionsupporting

confidence: 76%

“…Second, within the auditing literature, the study extends the findings of Yang et al () which show the link between client‐identified risks in narrative disclosures and audit fees. Whereas Yang et al () examined risks that clients are required to explicitly disclose in annual report narratives in the USA, we focus on a broader linguistic attribute of annual reports in a voluntary disclosure environment. That is, compared with the US institutional setting, where a separate risk section is required in the annual report, such a section is not devoted to risk disclosures in Australia.…”

Section: Introductionsupporting

confidence: 76%

“…Control variables are determined based on findings of prior research on determinants of audit fees (e.g., Boo & Sharma, ; Goodwin‐Stewart & Kent, ; Hay et al, ; Huang, Masli, Meschke, & Guthrie, ; Lai, Srinidhi, Gul, & Tsui, ; Yang et al, ). The control variables used in Equation include Big 4 auditor ( B4 ), audit committee independence ( AC_IND ), audit committee financial expertise ( AC_EXP ), nonaudit fees ( LNONAF ), auditor tenure ( TENURE ), type of opinion ( OPINION ), inventory‐to‐total assets ratio ( INVTA ), receivables‐to‐total assets ratio ( RECTA ), number of subsidiaries ( SRSUB ), profitability ( ROA ), leverage ( LEV ), number of segments ( SEGMET ), firm size ( SIZE ), firm age ( AGE ) as a listed company, and year and industry controls.…”

Section: Methodsmentioning

confidence: 99%

“…Therefore, we expect SEGMET to have a positive coefficient. Firm size ( SIZE ) is measured as the natural logarithm of the book value of total assets (Yang et al, ). We expect the natural logarithm of total assets ( SIZE ) to be positively associated with audit fees ( LAF ).…”

Section: Methodsmentioning

confidence: 99%

“…Auditors employ a broad range of information sources in evaluating audit risk and determining audit effort. Yang et al () found that clients' self‐identified risks provided in narrative annual report disclosures are positively associated with audit fees. Whereas Yang et al () provided evidence on clients' self‐identified risk disclosures reported in a separate section of the annual reports in the mandatory reporting context of the USA, linguistic attributes of annual reports may be relevant to auditors in unregulated environments where risks are not specified in separate sections of annual reports.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

See 4 more Smart Citations

Optimistic tone and audit fees: Some Australian evidence

et al. 2019

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We examine whether the tone of corporate annual reports is associated with audit pricing decisions. A unique dataset drawn from annual reports of nonfinancial firms listed on the Australian Stock Exchange for the period from 2002 to 2014 is generated using textual analysis. We find that annual reports that convey optimistic tone are associated with lower audit fees, suggesting that annual report tone reflects factors that auditors consider in assessing audit risk. Consistent with the inverse association between tone and audit fees, results of additional analysis show that annual report tone is positively associated with earnings quality. Our results hold after controlling for firm characteristics that influence audit pricing decisions and remain robust to alternative variable measurement and test of endogeneity. Overall, the findings suggest that auditors could enhance their audit risk assessment practices by systematically considering linguistic attributes of qualitative corporate disclosures.

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Section: Introductionsupporting

confidence: 76%

Section: Introductionsupporting

confidence: 76%

Section: Methodsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

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Optimistic tone and audit fees: Some Australian evidence

et al. 2019

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Software License Audit and Security Implications

Yang

Hosseinian-Far

Jraisat

et al. 2021

Cybersecurity, Privacy and Freedom Protection in the Connected World

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The typical purpose of software auditing is to assess the conformant of the developed software with the original plans, procedures, relevant regulations. Every audit involves several people with various roles in the auditing processes. The audit itself entails a number of preferable characteristics. In any audit engagement, the perceptions of the audit quality are directly related to the perceived reputation, credibility and objectivity of the auditor. This paper highlights and critically reviews the research works related to quality in audit, in particular, software license audit from the perspective of internal control and security. The paper examines existing studies in the field with a view to identifying future research opportunities in relation to software license auditing. Moreover, security implications and challenges in the context of software auditing, and a set of recommendations are provided.

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What is it going to cost? Empirical evidence from a systematic literature review of audit fee determinants

2020

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The audit market is subject to ongoing regulation to ensure or improve the quality of audit services. For this reason, international research on the audit market is highly popular. As part of this discussion, pricing is considered one of the most relevant aspects of audits. However, a remarkable heterogeneity of the control variables used in empirical studies can be observed. Prior meta-analyses on audit fees already summarized and categorized them for audit fee studies covering financial periods until fiscal year 2007. We contribute to the international literature with an up-to date and systematic review approach on audit fee studies published in international relevant scientific journals (JQ3 A + , A, B). In addition to prior reviews and meta-analyses, we finally suggest a standard model for the most important fee drivers that can be used for future audit fee studies. Our unique approach is based on an EBSCO keyword search with a sample of 385 papers published in international relevant scientific journals (JQ3 A + , A, B) and is using a scoring model to assess significance of audit fee control variables. On the one hand, we enrich the literature by a new state of the art paper on pricing within audit firms. On the other hand, we contribute to the international literature on audit markets from a theoretical point of view by deriving a new testable model of audit fee determinants. Therefore, our empirical results provide several fundamental insights that can be used for further empirical and theoretical research on the pricing of audit services. Thus, the results are meaningful not only for researchers within the field of auditing but also for experts in management, pricing or European legislature.

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Corporate Risk Disclosure and Audit Fee: A Text Mining Approach

Cited by 80 publications

References 29 publications

Optimistic tone and audit fees: Some Australian evidence

Optimistic tone and audit fees: Some Australian evidence

Software License Audit and Security Implications

What is it going to cost? Empirical evidence from a systematic literature review of audit fee determinants

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