The moderating impact of auditor industry specialisation on the relationship between fair value disclosure and audit fees: empirical evidence from Jordan

Alharasis, Esraa Esam; Prokofieva, Maria; Clark, Colin

doi:10.1108/ara-03-2022-0050

Cited by 14 publications

(17 citation statements)

References 49 publications

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“…The empirical model of this study is based on the nature of the dependent variable. This paper employs a quantitative methodology and extends the previous firm political connectivity (Alharasis et al. , 2022).…”

Section: Methodsmentioning

confidence: 99%

The effect of corruption level in steering the business–government relations: evidence from 23 African countries

Tesfagebreal

Tuo

et al. 2023

ARA

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PurposeThe purpose of this paper is to investigate the effect of corruption level in steering the business–government relations (BGRs) in developing countries. It also examines the moderating effect of firm size.Design/methodology/approachUsing robust tobit and probit models, this study tests the response behavior of 9787 firms from 23 African countries to their government's policy and regulations and the direct effect of corruption control level in their response decisions. The authors also perform several other additional analyses to ensure the robustness of the findings, including change analysis, two-stage model and recursive bivariate model.FindingsThe result shows that corruption level is among the significant factors that drive BGRs exponentially. The finding points out that, there is a strong alliance of business and government in more corrupt countries. Moreover, the impact of corruption level exacerbates when the firm is bigger.Research limitations/implicationsManagers should focus more on activities that create long-term sustainable advantage. Valuable time of the senior managers should not waste on negotiating government policies to earn a short term advantages.Practical implicationsIt is evident that legal and transparent government alliances can lead to economic rent for firms. However, it is important to note that any alliance based on corruption and illegality is short-lived and ultimately detrimental to long-term prosperity. Therefore, it is crucial for firms to prioritize ethical business practices and build relationships with governments that prioritize transparency and accountability.Social implicationsGiven the detrimental impact of corruption on economic progress, it is crucial for Africa policy-makers to prioritize reforms aimed at reducing its adverse effect. By implementing ethical and transparent business practices, countries can attract more investment and promote economic growth.Originality/valueThis study contributes to the existing literature on the passive form of political connectivity/activity and to what extend corruption level affect the political activities of firms.

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Section: Methodsmentioning

confidence: 99%

The effect of corruption level in steering the business–government relations: evidence from 23 African countries

Tesfagebreal

Tuo

et al. 2023

ARA

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“…23 mandated the "International Financial Reporting Standards (IFRS)" and the "International Standards on Auditing (ISA)" audits for listed companies. Entrepreneurs, Jordanian authorities and debtors use external audits, and it is evident that financial audits boost foreign investment and economic growth if they are correct (Alharasis et al, 2022a(Alharasis et al, , 2022bAbu Qadourah et al, 2022;Alnusairat et al, 2023). The JACPA represents Jordanian certified auditors and sets independent auditor minimum fees to avoid conflicts of interest and maintain a high-quality standard.…”

Section: Institutional Structurementioning

confidence: 99%

“…Correlation testing of Jordan’s stock market is unique (Alkhwaldi and Abdulmuhsin, 2022). First, Jordan was one of the first Middle Eastern (ME) countries to adopt the “International Accounting and Auditing Standards (IAAS).” Second, Jordan has an open economy policy, which allows both Arab and nonArab countries to invest in its capital market (Alharasis et al ., 2023a). Third, Jordan’s exceptional economic reforms, such as the liberal market privatization program and international economic links accord with the “European Union (EU)” and “World Trade Organization (WTO)” promoting meaningful research into developing countries (Tahat et al , 2018; Al-Okaily et al , 2022).…”

Section: Introductionmentioning

confidence: 99%

“…Fifth, and most importantly, COVID-19 devastated Jordan’s small economy. Due to losses in the tourism industry, the “World Bank (WB)” predicted Jordan’s GDP would fall by 1.5% by the third quarter, as stated in the 2020 Amman Stock Exchange (ASE) report (Alharasis et al , 2021). Subsequently, this article examines how the current crisis affected Jordan.…”

Section: Introductionmentioning

confidence: 99%

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Evaluation of ownership structure and audit-quality in the wake of the Covid-19 crisis: empirical evidence from Jordan

Alharasis

2023

IJLMA

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Purpose This study aims to collect new empirical evidence to determine how different forms of ownership structure responded to the recent COVID-19 crisis. In light of this tragedy, it explores the relationship between ownership structure forms (i.e. block-holders, foreign, institutional and family ownerships) and audit quality (proxied by audit fees). Design/methodology/approach In total, 3,200 firm-year observations for Jordanian enterprises covering the years 2005 through 2020 are used in an ordinary least squares regression with firm-clustered standard error to assess the hypotheses. Findings The regression results showed that COVID-19 strengthens the association between each type of ownership (i.e. block-holders, foreign, institutional ownership forms) and audit quality. This result reflects the need for high-quality audit services during the pandemic by such owners to improve their business decisions and limit agency-conflict issues. However, the analysis failed to find any effect of COVID-19 when it comes to family ownership. Family-controlled firms may react faster in crisis situations, and correspondingly, they do not bear high audit costs. The extended analysis covering the years 2005–2022 came to the same results. Practical implications The results aid authorities in their control and management of the auditing business. The findings have important consequences for policymakers, lawmakers, regulators and the audit profession as they assess the growing issues in an uncertain economic environment. Evidence is provided that may be used to reassure investors and aid authorities as they devise appropriate remedies to the pandemic-triggered economic crisis. The findings may aid in the improvement of legislation that governs Jordan’s auditing industry. Furthermore, the results can be generalized to other Middle Eastern countries. Originality/value To the best of the authors’ knowledge, this is the first study to empirically evaluate how different types of ownership affect audit quality in response to a dramatic shift in auditors’ working conditions brought on by the global health calamity. In emerging economies like Jordan, this type of analysis allows for preliminary assumptions to be established about ownership status during the COVID-19 outbreak. It adds to the body of auditing knowledge by shedding light on how various kinds of ownership affect responses to adverse events. This assessment is intended to serve as the definitive testimony in the field of accounting regarding the effects of the coronavirus across various corporations’ portfolios.

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“…Secondly, Jordan’s open economy policy encourages participation in the country’s capital market from both Arab and non-Arab nations (Alharasis and Mustafa, 2023). In addition, Jordan’s free market privatization policy and international economic ties coincide with the “European Union (EU)” and the “World Trade Organisation (WTO)” (Tahat et al , 2018; Alharasis et al , 2023a, 2023b), which both support extensive research into emerging countries. Finally, unlike in every other Arab nation, public companies in Jordan are required to disclose audit costs in their annual reports (Tahat et al , 2018).…”

Section: Introductionmentioning

confidence: 99%

Key audit matters and auditing quality in the era of COVID-19 pandemic: the case of Jordan

Alharasis,

Alkhwaldi,

Hussainey

2024

IJLMA

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Purpose This study aims to investigate the moderating effect of the COVID-19 epidemic on the relationship between key audit matter (KAM) and auditing quality. Design/methodology/approach The authors use the ordinary least squares regression on data from 942 firm-year observations of Jordanian non-financial institutions across the period (2017–2022) to test the hypotheses. The authors use content analysis method to measure levels of KAM disclosure. Findings The investigation’s findings highlight the importance of KAM disclosure in achieving audit quality in line with international standard on auditing no. 701 (ISA-701) requirements. COVID-19 is also found to have a positive relationship with audit quality, further confirming the crisis’s devastating impact on audit complexity and risks and providing evidence for the need for supplementary, high-quality audit services. Due to the correlation between KAM disclosure and increased auditor workload and responsibility, the analysis reveals that the COVID-19 factor strengthens the link between KAM disclosure and audit quality. Practical implications This study has the potential to be used as a basis for the creation of a new regulation or standard regarding the reporting of unfavourable events in financial filings. This study’s findings provide standard-setters, regulators and policymakers with current empirical data on the effects of implementing ISA-701’s mandate for external auditors to provide more information on KAM. The COVID-19 crisis offers a suitable setting in which to examine the value of precautionary disclosures in times of economic uncertainty, as well as the significance of confidence interval disclosures and the role of external auditing in calming investor fears. This analysis is helpful for stakeholders, regulatory agencies, standard-setters and readers of audit reports who are curious about the current state of KAM disclosures and the implementation of ISA-701. The results may have ramifications for academia in the form of a call for more evidence expanding this data to other burgeoning fields to have a clear explanation of the real impact of reporting KAM on audit practices. Originality/value To the authors’ awareness, this research is one of the few empirical studies on the effect of the COVID-19 crisis on auditing procedures, and more specifically, the effect of disclosures on KAM by external auditors on audit quality. This study’s findings represent preliminary scientific evidence linking the pandemic to business performance. Minimal research has been done on how auditors in developing nations react to pandemic investor protection and how auditors’ enlarged reporting responsibilities affect them. The vast majority of auditing studies have been conducted in a highly regulated system, so this research contributes by examining audit behaviour in a weak legal context.

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The moderating impact of auditor industry specialisation on the relationship between fair value disclosure and audit fees: empirical evidence from Jordan

Cited by 14 publications

References 49 publications

The effect of corruption level in steering the business–government relations: evidence from 23 African countries

The effect of corruption level in steering the business–government relations: evidence from 23 African countries

Evaluation of ownership structure and audit-quality in the wake of the Covid-19 crisis: empirical evidence from Jordan

Key audit matters and auditing quality in the era of COVID-19 pandemic: the case of Jordan

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