Does auditing multiple clients affiliated with the same business group reduce audit quality? Evidence from an emerging market

The same network auditor, family business groups and earnings manipulation: an evidence from emerging market

“…According to Chang et al (2008), when all group-affiliated enterprises are audited by the same audit network, the audit quality will enhance owing to the simple flow of information between the auditors of the same audit firm, which may lead to less EM practices. In addition to this, appointing the same audit firm may have a cost advantage for the group of affiliated firms (Ocak et al , 2021). Nevertheless, using the same audit companies by a corporate group increases an audit firm’s economic dependency on the linked organization, compromising auditor independence and audit quality (Lee et al , 2020).…”

“…However, even if a business group’s engagement of the same network auditor for its affiliated firms improves the auditor’s understanding, it will also increase the auditor’s economic dependence on the business group (Chang and Chen, 2015; Ocak et al , 2021). Under the “influential power hypothesis”, when the majority shareholders expropriate the minority shareholders in the firms, they will engage in the same network auditor to conceal their expropriation and avoid the auditor’s monitoring.…”

“…Secondly, the prevalence of related party transactions in the FBG affiliates (Hussain, 2019) coupled with a weak financial market may encourage the management of the FBG-affiliated firms to practise EM. Thirdly, most of the other studies using the same network auditors have focused on developing economies (Chang and Chen, 2015; Ocak et al , 2021; Sun et al , 2020; Yang et al , 2016). To the best of our knowledge, the role of the same network auditors in the FBGs is unexplored regarding EM in general and Pakistan in particular, which is an emerging economy.…”

“…To the best of our knowledge, the role of the same network auditors in the FBGs is unexplored regarding EM in general and Pakistan in particular, which is an emerging economy. Furthermore, previous research has examined the role of audit quality in business groups and EM (Muttakin et al , 2017; Ocak et al , 2021), the board quality and business group affiliation (Johl et al , 2016), the role of the business group and listing status on EM (Kim and Yi, 2006), the role of ownership concentration and client importance on EM in business groups (Bhutta et al , 2016) and the role of external monitoring in group affiliated firms (Lin et al , 2021). To the best of our knowledge, no study in the literature has examined the role of same network auditors on EM in FBG-affiliated firms.…”

أثر مستوى الأهمیة الاقتصادیة لعمیل المراجعة على مستوى التحفظ غیر الطبیعی لمراجع الحسابات المنسوب إلى نوعیْ خطأ المراجعة الأول والثانی دراسة تطبیقیة على عینة من الشرکات المقیدة بالبورصة المصریة

“…‫د‬ ‫د‬ ‫الحنث‬ ‫دابؤ‬ ‫ع‬ ‫دد‬ ‫دا‬ ‫ى‬ ‫ةف‬ ‫دو‬ ‫املرا‬ ‫دي‬ ‫ع‬ ‫الطث‬ ‫ظ‬ ‫دحر‬ ‫ال‬ ‫دحوم‬ ‫ةما‬ ‫دابات‬ ‫اابا‬ ‫دل‬ ‫اج‬ ‫مر‬ ‫در‬ ‫ري‬ ‫ث‬ ‫دي‬ ‫ق‬ ‫دوارد‬ ‫ال‬ ‫دي‬ ‫عأ‬ ‫ال‬ ‫ظ‬ ‫دحر‬ ‫ال‬ ‫دحوم‬ ‫ما‬ ‫ل‬ ‫د‬ ‫ب‬ ‫درل‬ ‫ال‬ ‫دا‬ ‫ن‬ ‫دارب‬ ‫نث‬ ‫دي‬ ‫عأ‬ ‫ال‬ ‫سا‬ ‫ثر‬ ‫احوم‬ ‫ب‬ (Ocak et al, 2021;Can, 2020;Ocak, 2018;Barkess et al, 2002 Asare et al, 2019;Hatfield et al, 2011;Kerler III & Brandon, 2010;Cianci & Bierstaker, 2009;Nelson et al, 2002;Braun, 2001 (Berglund, et al, 2018) ‫د‬ ‫ةوا‬ ‫ل‬ ‫دة‬ ‫اجع‬ ‫ةاملر‬ ‫دثة‬ ‫املراس‬ ‫داب‬ ‫منة‬ (Amin et al, 2021;Berglund, et al, 2018;Knechel and Vanstraelen, 2007) ‫ل‬ ‫اجعة‬ ‫املر‬ ‫جعا‬ ‫دار‬ ‫ةم‬ (Berglund et al, 2018;Louwers, 1998…”