MD&amp;A readability, auditor characteristics, and audit fees

Wang, Le; Chen, Xiaoyan; Li, Xing; Tian, Gaoliang

doi:10.1111/acfi.12748

Cited by 20 publications

(13 citation statements)

References 35 publications

(90 reference statements)

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“…Research by Ege and Stuber (2022) which states that one of the causes of auditor failure in detecting fraud is the low level of audit skepticism. As well as research conducted by Wang et al (2021), showing that auditors with a combination personality type "sensing-thinking" and "intuitivethinking" show a higher professional sceptic thinking in detecting fraud, compared to auditors with other personality types.…”

Section: The Effect Of Professional Skepticism In Financial Statementmentioning

confidence: 67%

An Analysis of Auditors’ Characteristic and Non-Characteristic Components on Detecting The Fraudulent Occurrences in Public Sectors

Aisyaturrahmi

2022

Utsaha

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This study is to examine the influence of the auditors’ characteristic and non-characteristic components on detecting the fraudulent occurrences in the public sectors. Specifically, this study focuses on financial statement fraud as it has the most negative impacts on the society and beyond. This study is developed by the empirical evidence from Indonesian external auditors. The author in the initial stage creates hypotheses to explain the interaction processes between the auditors’ characteristic and non-characteristic components on detecting the fraudulent occurrences in the public sectors. The results of this study concluded that audit procedures and strategies have a significant effect on detecting financial statement fraud in public sector organizations. Meanwhile, The auditors competence is not significantly responsible in detecting financial statement fraud in public sector organizations. The auditors independence and professional skepticism has a significant effect on detecting fraudulent reports in public sector organizations. Thus, the auditor objectivity has no significant effect on the success of detecting financial statement fraud in public sector organizations.

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Section: The Effect Of Professional Skepticism In Financial Statementmentioning

confidence: 67%

An Analysis of Auditors’ Characteristic and Non-Characteristic Components on Detecting The Fraudulent Occurrences in Public Sectors

Aisyaturrahmi

2022

Utsaha

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“…By using the readability of MD&A in the WinGo database, Wang et al. (2021) found that firms are charged higher audit fees when their MD&A readability is lower. Hu et al.…”

Section: Methodsmentioning

confidence: 99%

Corporate Tax Avoidance and Corporate Social Responsibility Disclosure Readability: Evidence from China

Wang

Cullinan

et al. 2022

Australian Accounting Review

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Paying taxes to support the societies in which they operate is both a legal and ethical responsibility of business. Nevertheless, some companies work to avoid taxes, which could cause society to question the legitimacy of the organisation. Many companies provide reports on their corporate social responsibility (CSR) activities; more transparent CSR reports may help to restore the legitimacy loss associated with tax avoidance. We investigate the relationship between tax avoidance and CSR report readability among Chinese companies. We find a positive relationship between corporate tax avoidance and the readability of CSR reports. This relation is weaker among state-owned enterprises, which may have stronger pre-existing legitimacy owing to their relationship with the state. The relationship is also weaker among companies in less developed regions of China, which have less developed institutions to monitor organisational legitimacy. Overall, our results are consistent with the notion that CSR reporting represents an attempt to overcome legitimacy concerns arising from tax avoidance. Our findings indicate that tax avoidance and CSR reporting are alternative means of establishing legitimacy, rather than complementary reflections of an organisational culture that values (or devalues) CSR.Corporate social responsibility (CSR) refers to the actions designed by companies to improve their social and environmental conditions (Mackey et al. 2007). One aspect of CSR is a company's willingness to pay taxes to promote social welfare. If a company avoids paying its 'fair share' of taxes, the company can be considered a 'poor citizen' (Bankman 2004), and viewed as socially irresponsible (Huseynov and Klamm 2012). Avoiding taxes can therefore deviate from social expectations, reducing the trust of stakeholders and endangering corporate legitimacy (Lanis and Richardson 2013). CSR reporting may be a solution for managers to maintain (or regain) legitimacy among stakeholders (Bebbington et al. 2008;Chen et al. 2016) when they are avoiding taxes.Disclosure by management of CSR activities has drawn attention in both research and practice (i.e., Dhaliwal et al. 2011;Lys et al. 2015;Chen et al. 2018). CSR reporting can reduce information asymmetry and build stakeholder trust (Kim et al. 2012). More readable CSR reporting can help firms improve their communication with stakeholders about their legitimacy and compliance with social norms by using clear, plain and understandable language (Zhang et al. 2021). Zhang et al. (2021) also found that the reputational damage caused by financial restatements can be at least partially restored by more readable CSR reports. If the reputational damage from financial restatements can be offset by enhanced CSR readability, managers may perceive that the adverse effect of tax avoidance on corporate legitimacy can also be offset by more readable CSR reports. In this 'legitimacy gap' perspective, paying a fair share of taxes or providing transparent CSR disclosure could be alternative/substitute means for c...

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“…‫باح‬ ‫األر‬ ‫ة‬ ‫إدار‬ ‫و‬ ‫المستقبلي‬ ‫األداء‬ ‫مثل:‬ ‫التمويل‬ ‫و‬ ‫المحاسبة‬ ‫ات‬ ‫متغير‬ ‫من‬ ‫كبير‬ ‫عدد‬ ‫على‬ ‫اءة‬ ‫للقر‬ (Ajina et al, 2016;Li, 2008) ‫االستثمار‬ ‫وكفاءة‬ ، (Biddle et al, 2009) ‫الماليين‬ ‫المحللين‬ ‫وسلوك‬ ، (Aymen et al, 2018;Lehavy et al, 2011) ‫األسهم‬ ‫في‬ ‫ين‬ ‫للمستثمر‬ ‫التداول‬ ‫وسلوك‬ ، (Lawrence, 2013;Miller, 2010) ‫باح‬ ‫باألر‬ ‫التنبؤ‬ ‫أخطاء‬ ‫و‬ ‫ائد‬ ‫العو‬ ‫وتقلب‬ ، (Loughran & McDonald, 2014) ‫األسهم‬ ‫أسعار‬ ‫انهيار‬ ‫وخطر‬ ، (Kim et al, 2019) ‫المعلومات‬ ‫تماثل‬ ‫وعدم‬ ، (Dalwai et al, 2021;Luo et al, 2018 (Bloomfield, 2008;Gosselin et al, 2021;Li, 2008;Lo et al, (Courtis, 1987(Courtis, , 1995Jang & Rho, 2016;Li, 2008 (Ayuningtyas & Harymawan, 2021;Ertugrul et al, 2017;Fang-Klingler, 2019;Hoffmann & Kleimeier, 2021 (Abernathy et al, 2019;Blanco et al, 2021;Salehi et al, 2020;Wang et al, 2021;Xu et al, 2020b (Bloomfield, 2008;Gosselin et al, 2021;Li, 2008;Lo et al, 2017) : (Ayuningtyas & Harymawan, 2021;Courtis, 1995;De Franco et al, 2015;Ferri et al, 2022;Hassan et al, 2019;…”

Section: ‫ملخص‬ ‫البحث‬unclassified

تأثیر قابلیة التقاریر المالیة السنویة للقراءة على تكلفة رأس المال المقترض وأتعاب عملیة المراجعة: دراسة تطبیقیة على الشركات المدرجة بالبورصة المصریة

عوض

2022

مجلة الاسکندریة للبحوث المحاسبیة

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The main objective of this study is to measure the impact of the annual financial reports' readability on the cost of debt capital and audit fees. This study used data from 64 Egyptian listed firms during the period from 2015 to 2020.The study used three indicators to measure the annual financial reports' readability; the LIX index, the number of pages of the annual report and the board of directors' report, and the number of words contained in the board of directors' report. Using the feasible generalized least squares (FGLS) method, the results show a positive relationship between the declining annual financial reports' readability, the cost of debt capital, and audit fees. The principal component analysis was used as a robustness test to develop a composite index to gauge the annual financial reports' readability in the Egyptian context. The result of the robustness test confirmed the positive relationship between the variables.

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MD&A readability, auditor characteristics, and audit fees

Cited by 20 publications

References 35 publications

An Analysis of Auditors’ Characteristic and Non-Characteristic Components on Detecting The Fraudulent Occurrences in Public Sectors

An Analysis of Auditors’ Characteristic and Non-Characteristic Components on Detecting The Fraudulent Occurrences in Public Sectors

Corporate Tax Avoidance and Corporate Social Responsibility Disclosure Readability: Evidence from China

تأثیر قابلیة التقاریر المالیة السنویة للقراءة على تكلفة رأس المال المقترض وأتعاب عملیة المراجعة: دراسة تطبیقیة على الشركات المدرجة بالبورصة المصریة

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