Distracted institutional investors and audit risk

Yang, Jingyu; Wu, Hai; Yu, Yangxin

doi:10.1111/acfi.12718

Cited by 10 publications

(6 citation statements)

References 65 publications

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“…As far as debt (DEBT) is concerned, the absence of any association for SMEs may stem from less pressure on the part of creditors to speed up the presentation of the financial statements [32]. Those studies which identified a positive association highlighted the impact on ARL in the case of high debt levels [74] or a large number of debtors [26]; thus, less debt and/or fewer creditors in the case of SMEs may justify this result.…”

Section: Discussionmentioning

confidence: 99%

Audit Report Lag. Differential Analysis between Spanish SMEs and Non-SMEs

Escaloni

Mareque

2021

Sustainability

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Audit report lag is considered to be an indicator of audit punctuality and efficiency, while the existence of factors that may determine this lag has been signalled in previous studies. The objective of this study is to identify the determinants of audit report lag in Spanish SMEs, and to analyse the potential singularities of these factors with regards to non-SMEs. With this aim in mind, a set of factors has been analysed; in the previous literature, a relationship has been observed between these factors and the characteristics of the audited company, the auditor and the audit exercise. Additionally, the possible influence of financial crisis and recovery periods is analysed. The sample analysed is made up of 3217 unlisted Spanish firms for the years 2008–2015. Multiple linear regression analysis is used, modelling the audit report lag based on the independent variables related to the characteristics of the audited company, the auditor and the audit exercise. Based on the results obtained, we can support the existence of differences among the independent variables responsible for the audit report lag based on company type (SME/non-SME), with a larger number of factors impacting the audit report lag in SMEs. It is worth noting the significant relationship between audit report lag and opinion and crisis variables, both for the SME and non-SME models. In the case of SMEs, links between audit report lag and the likelihood of bankruptcy, auditor type, number of economic activities carried out by the audited company, the industry to which the audited company pertains, and audit fees were also observed. Furthermore, we can conclude that audit report lag is greater in SMEs and that the independent variables explaining report lag differ according to whether the company is an SME or not.

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Section: Discussionmentioning

confidence: 99%

Audit Report Lag. Differential Analysis between Spanish SMEs and Non-SMEs

Escaloni

Mareque

2021

Sustainability

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“…Consistent with the decrease in corporate governance by distracted institutional investors, Yang et al (2020) find that auditors allocate more effort, proxied in their study by audit fee and audit report lags, to firms with distracted institutional investors due to the increased audit risk.…”

Section: Institutional Investors' Attentionmentioning

confidence: 52%

“…Accordingly, Liu et al (2020) find that ineffective independent directors are less likely to receive unsupportive votes in proxy voting from institutional investors when these investors are temporally distracted. Also, Yang et al (2020) find that firms' audit risk increases when firms' institutional investors are distracted.…”

Section: Chapter 1 Introductionmentioning

confidence: 93%

The Effect of Institutional Investor Distraction on Analyst Forecasts

Xie

2022

SSRN Journal

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Section: Data and Research Designmentioning

confidence: 99%

“…We also include debt security as control as it is related to the level of agency problem in a company (Park, 2000). Additionally, we include two variables related to institutional investors' shareholdings to isolate the effect of Distract on Bank_debt (Yang et al, 2020). We include the fraction of shares held by institutional investors (Instown) and institutional shareholders concentration (Instcon).…”

Section: The Modelmentioning

confidence: 99%

Institutional investors distraction and debt choice

Asamoah

Dak-Adzaklo

Ofosu

2022

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PurposeThis study aims to investigate the impact of institutional investors distraction on firms' choice between bank debt and public debt.Design/methodology/approachThe study employs the measure of institutional investors distraction from Kempf et al. (2017), which captures exogenous attention-grabbing events in other aspects of institutional investors' portfolios holdings to examine this research question. The study uses a sample of 16,047 firm-year observations comprising 2,521 US firms for the period of 2000–2016.FindingsThe result shows a significant positive association between institutional shareholder distraction and firms' bank ratio. Cross-sectional tests show that the positive association between institutional shareholders distraction and firms' bank ratio is stronger for firms in poorer information environments and for firms facing greater competitive threats from rivals.Originality/valueThis study underscores the important governance role played by institutional shareholders and the consequence when such a monitoring role is impaired. In particular, firms with distracted shareholders rely on expensive bank monitoring and scrutiny to supply their additional monitoring capacity.

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Distracted institutional investors and audit risk

Cited by 10 publications

References 65 publications

Audit Report Lag. Differential Analysis between Spanish SMEs and Non-SMEs

Audit Report Lag. Differential Analysis between Spanish SMEs and Non-SMEs

The Effect of Institutional Investor Distraction on Analyst Forecasts

Institutional investors distraction and debt choice

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