Organization capital and audit fees around the world

Habib, Ahsan; Hasan, Mostafa Monzur; Sun, Xuan Sean

doi:10.1111/ijau.12197

Cited by 5 publications

(3 citation statements)

References 105 publications

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“…They also show that firms with greater intangible assets are linked to greater audit efforts, and litigation risk for auditors is reflected in higher audit fees. Habib et al (2020) find a positive and significant relationship between organizational capital and audit fees. Alrashidi et al (2021) demonstrate that finance providers consider audit and non-audit fees as signals of high-quality audits that increase the creditability of financial statements and positively affect firms' access to finance.…”

Section: Hypothesis Development Determining the Relationship Between ...mentioning

confidence: 75%

“…Other studies (Ghadhab et al 2019;Januarti and Wiryaningrum 2018) find that the main factors affecting audit fees are the characteristics of the audit client, such as firm size, risk, and complexity. Habib et al (2020) suggest that agency problems and intangible assets cause risk and firm complexity.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…Audit fees are the fees paid to the audit firm for all the services provided to the audit client and can be affected by client size, complexity, audit risk, and generally, audit effort and litigation risk (Simunic 1980;Salehi et al 2022a). Prior research has examined the effects of different factors on audit fees, such as ownership structure (Tee 2018;Shan et al 2019;Liang et al 2021), corporate governance and its mechanisms (Salehi et al 2018a;Al-Najjar 2018), a firm's intangible assets (Datta et al 2020;Prabhawa and Nasih 2021), and organizational capital (Habib et al 2020).…”

Section: Introductionmentioning

confidence: 99%

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The Relationship between Intellectual Capital and Audit Fees

Dashtbayaz

Mezher

Albadr

et al. 2023

JRFM

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The present study investigates whether intellectual capital (IC) is related to audit fees and financial statement restatements in companies listed on the Iraq Stock Exchange (ISE). The present study is a pioneer investigation of this topic in emerging markets. Using a sample of all listed companies on the ISE from 2014 to 2020, the research hypotheses are tested with multiple regression based on panel data and the fixed-effects model. The results demonstrate that intellectual capital is positively and significantly related to normal and abnormal audit fees. Moreover, findings indicate direct and significant relationships between intellectual capital components and normal and abnormal audit fees. This means investment in IC components is likely to determine the auditors’ evaluation of a given client’s riskiness. Thus, an efficient IC investment level might be considered a key factor that companies are expected to consider. The findings of this study provide valuable implications for users of financial statements, analysts, and policymakers with information regarding IC, risk determinants, and audit fees. Policymakers can improve market efficiency by implementing regulations that foster IC disclosure as a risk-determinant factor.

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Section: Hypothesis Development Determining the Relationship Between ...mentioning

confidence: 75%

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

The Relationship between Intellectual Capital and Audit Fees

Dashtbayaz

Mezher

Albadr

et al. 2023

JRFM

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Organization capital and financial statement comparability

Biswas,

Ranasinghe

2024

J Corp Accounting Finance

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We examine whether firms with high organizational capital produce more (less) financial statement comparability. We use firm‐level data from the U.S. and apply regression analyses to a sample of 56,459 firm‐year observations from 1987 to 2019. Organizational capital encompasses the processes, systems, knowledge, culture, and technology of a firm, playing a crucial role in securing competitive advantages, which leads to enhanced profitability and growth prospects. It has been observed that companies rich in organizational capital experience better financial outcomes. However, these companies also face significant agency issues, as both shareholders and crucial employees have stakes in the cash flows generated by organizational capital. We propose that managers of companies with substantial organizational capital tend to produce financial statements that are less comparable. This strategy allows them to obscure the firm's economic performance from shareholders, aiming to retain a larger portion of the cash flows. The discovery that companies modify comparability in reaction to organization processes, culture and business models captures the attention of regulators and policymakers, who highlight the significance of comparability in enhancing the utility of information for users. The findings extend the literature on the effect of organizational capital on accounting choices.

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Empirical Analysis of Multiple Regulatory Effects and Non Efficiency Effects Based on Stata Software

Shi,

Utufua

2022

Application of Intelligent Systems in Multi-Modal Information Analytics

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Organization capital and audit fees around the world

Cited by 5 publications

References 105 publications

The Relationship between Intellectual Capital and Audit Fees

The Relationship between Intellectual Capital and Audit Fees

Organization capital and financial statement comparability

Empirical Analysis of Multiple Regulatory Effects and Non Efficiency Effects Based on Stata Software

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