Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Tax avoidance and audit report lag in South Africa: the moderating effect of auditor type

Tax avoidance and audit report lag in South Africa: the moderating effect of auditor type The purpose of this paper is to examine the association between audit report lag (ARL) and tax avoidance and test whether external auditor type affects this relationship.Design/methodology/approachARL is measured as the number of days from fiscal year-end to the date of the auditor’s report, while tax avoidance is measured using effective tax rate.FindingsUsing a sample of 45 South African companies over the period of 2010–2013, the authors document that ARL is positively associated with tax avoidance and this relationship remains positive when the company is audited by a Big-4 audit firm and not significant when the company is audited by a non-Big-4.Originality/valueThe authors’ findings have important implications for auditors aiming to reduce audit risk as they may consider the impact of tax avoidance and pay more attention to companies with a high degree of tax avoidance. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Crime Emerald Publishing

Tax avoidance and audit report lag in South Africa: the moderating effect of auditor type

Gontara, Hela; Khlif, Hichem
Journal of Financial Crime , Volume 28 (3): 9 – Aug 5, 2021
Download PDF
9 pages

Loading next page...
 
/lp/emerald-publishing/tax-avoidance-and-audit-report-lag-in-south-africa-the-moderating-by38wp8DTu
Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1359-0790
eISSN
1359-0790
DOI
10.1108/jfc-09-2020-0197
Publisher site
See Article on Publisher Site

Abstract

The purpose of this paper is to examine the association between audit report lag (ARL) and tax avoidance and test whether external auditor type affects this relationship.Design/methodology/approachARL is measured as the number of days from fiscal year-end to the date of the auditor’s report, while tax avoidance is measured using effective tax rate.FindingsUsing a sample of 45 South African companies over the period of 2010–2013, the authors document that ARL is positively associated with tax avoidance and this relationship remains positive when the company is audited by a Big-4 audit firm and not significant when the company is audited by a non-Big-4.Originality/valueThe authors’ findings have important implications for auditors aiming to reduce audit risk as they may consider the impact of tax avoidance and pay more attention to companies with a high degree of tax avoidance.

Journal

Journal of Financial Crime – Emerald Publishing

Published: Aug 5, 2021

Keywords: South Africa; ARL; Effective tax rate; Auditor type

References

  • Internal audit assistance and external audit timeliness
    Abbott, L.J.; Parker, S.; Peters, G.F.
  • Determinants of audit report lag: does implementing corporate governance have any impact? Empirical evidence from Egypt
    Afify, H.A.E.
  • Political connections, joint audit and tax avoidance: evidence from Islamic banking industry
    Ajili, H.; Khlif, H.
  • An empirical analysis of audit delay
    Ashton, R.H.; Willingham, J.J.; Elliott, R.K.
  • The separation of ownership and control and corporate tax avoidance
    Badertscher, B.A.; Katz, S.P.; Rego, S.O.
  • The association between corporate tax avoidance and audit efforts: evidence from Korea
    Bae, S.H.
  • Does tax aggressiveness reduce corporate transparency?
    Balakrishnan, K.; Blouin, J.; Guay, W.
  • An examination of audit delay: further evidence from New Zealand
    Carslaw, C.A.; Kaplan, S.E.
  • Audit pricing, legal liability regimes, and big 4 premiums: theory and cross-country evidence
    Choi, J.; Kim, J.B.; Liu, X.
  • Corporate tax avoidance and the timeliness of annual earnings announcements
    Crabtre, A.D.; Kubick, R.
  • Auditor size and audit quality
    DeAngelo, L.
  • Does corporate tax aggressiveness influence audit pricing?
    Donohoe, M.P.; Knechel, W.
  • The effects of executives on corporate tax avoidance
    Dyreng, S.; Hanlon, M.; Maydew, E.
  • The impact of SOX section 404 internal control quality assessment on audit delay in the SOX era
    Ettredge, M.L.; Li, C.; Sun, L.
  • Does family ownership reduce corporate tax avoidance? The moderating effect of audit quality
    Gaaya, S.; Lakhal, N.; Lakhal, F.
  • Timeliness of annual earnings announcements: Some empirical evidence
    Givoly, D.; Palmon, D.
  • Governance regulatory changes, international financial reporting standards adoption, and New Zealand audit and non‐audit fees: empirical evidence
    Griffin, P.A.; Lont, D.H.; Sun, Y.
  • A review of tax research
    Hanlon, M.; Heitzman, S.
  • Tax avoidance, property rights and audit fees
    Hu, N.
  • The extent of audit report lag and governance mechanisms
    Kaaroud, M.A.; Mohd Ariffin, N.; Ahmad, M.
  • Internal control quality, Egyptian standards on auditing and external audit delays: evidence from the Egyptian stock exchange
    Khlif, H.; Samaha, K.
  • Corporate social responsibility and tax aggressiveness: an empirical analysis
    Lanis, R.; Richardson, G.
  • Determinants of audit report lag: some evidence from the Athens Stock Exchange
    Leventis, S.; Weetman, P.; Caramanis, C.
  • The impact of big 4 consulting on audit reporting lag and restatements
    Meckfessel, M.D.; Sellers, D.
  • Audit committee effectiveness and financial reporting timeliness: the case of Tunisian listed companies
    Oussii, A.A.; Boulila Taktak, N.
  • The impact of internal audit function quality and contribution on audit delays
    Pizzini, M.; Lin, S.; Vargus, M.; Ziegenfuss, D.E.
  • An investigation on the effect of tax avoidance on the transparency of financial reporting firms listed in Tehran stock exchange
    Pourheidari, O.; Fadavi, M.H.; Amini, N.M.
  • Corporate governance, incentives, and tax avoidance
    Armstrong, C.S.; Blouin, J.L.; Jagolinzer, A.D.; Larcker, D.F.
  • Does tax aggressiveness reduce financial reporting transparency?
    Balakrishnan, K.; Blouin, J.; Guay, W.
  • Are family firms more tax aggressive than non-family firms?
    Chen, S.; Chen, X.; Cheng, Q.; Shevlin, T.
  • Managerial acquisitiveness and corporate tax avoidance
    Gul, F.A.; Khedmati, M.; Shams, S.M.
  • The persistence and pricing of earnings, accruals, and cash flows when firms have large book-tax differences
    Hanlon, M.
  • Tax haven networks and the role of the big 4 accountancy firms
    Jones, C.; Temouri, Y.; Cobham, A.
  • The effect of tax avoidance on capital structure choices
    Lee, Y.; Venkat, A.
  • The effect of audit quality on tax avoidance
    Lestari, N.; Nedya, S.
  • How does tax avoidance affect transparency?
    Li, C.M.; Sun, K.
  • Dual class ownership and tax avoidance
    McGuire, S.T.; Wang, D.; Wilson, R.J.
  • The effect of auditor characteristics on tax avoidance of Iranian companies
    Salehi, M.; Tarighi, H.; Shahri, T.A.
  • The effect of tax avoidance on cost of debt capital: evidence from Korea
    Shin, H.J.; Woo, Y.S.
  • Tax aggressiveness in private family firms: an agency perspective
    Steijvers, T.; Niskanen, M.