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Audit fees, audit report lag and abnormal tone: evidence from China

Audit fees, audit report lag and abnormal tone: evidence from China This study aims to provide evidence on the association between abnormal tone and audit fees, as well as between abnormal tone and audit report lag.Design/methodology/approachThis study uses a fixed-effects model to examine the relationship between abnormal positive tone and audit engagement (audit fees and audit report lag). Following Blanco et al., the authors used propensity score matching to examine the robustness of the findings.FindingsAbnormal positive tone affects the audit process. An abnormal positive tone in annual reports is associated with greater audit effort and higher audit fees.Originality/valueThis study contributes to the determinants of audit fees and audit lag by analyzing the impact of an abnormal positive tone on audit engagement. The literature analyzing the determinants of audit engagement often focuses on the quality of non-textual information. This study analyzes the impact of the quality of textual information (measured by abnormal tone) on audit engagement, which provides evidence of the association between textual disclosure and audit. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Managerial Auditing Journal Emerald Publishing

Audit fees, audit report lag and abnormal tone: evidence from China

Managerial Auditing Journal , Volume 38 (2): 20 – Jan 20, 2023

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References (50)

Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
0268-6902
eISSN
0268-6902
DOI
10.1108/maj-04-2021-3086
Publisher site
See Article on Publisher Site

Abstract

This study aims to provide evidence on the association between abnormal tone and audit fees, as well as between abnormal tone and audit report lag.Design/methodology/approachThis study uses a fixed-effects model to examine the relationship between abnormal positive tone and audit engagement (audit fees and audit report lag). Following Blanco et al., the authors used propensity score matching to examine the robustness of the findings.FindingsAbnormal positive tone affects the audit process. An abnormal positive tone in annual reports is associated with greater audit effort and higher audit fees.Originality/valueThis study contributes to the determinants of audit fees and audit lag by analyzing the impact of an abnormal positive tone on audit engagement. The literature analyzing the determinants of audit engagement often focuses on the quality of non-textual information. This study analyzes the impact of the quality of textual information (measured by abnormal tone) on audit engagement, which provides evidence of the association between textual disclosure and audit.

Journal

Managerial Auditing JournalEmerald Publishing

Published: Jan 20, 2023

Keywords: Abnormal tone; Audit fee; Audit report lag; Audit opinion; Big 10

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