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The impact of financial crisis on audit quality and audit fee stickiness: evidence from Iran

The impact of financial crisis on audit quality and audit fee stickiness: evidence from Iran PurposeThere is a few studies about stickiness and changes in audit fees. In previous studies, researchers focused on fees behavior, which is expected to change in the short term, regardless of mentioning stickiness of fees and its possible changes. In this study, the authors investigate stickiness of audit fees and the influential factors, specifically audit quality and financial crisis in an emerging economy.Design/methodology/approachAudit quality is examined under three main criteria, namely, auditor size, auditor industry specialization and auditor tenure. The Altman adjusted bankruptcy model is used to identify firms’ financial crisis. In this study, listed companies in Tehran stock exchange market is investigated during the period of 2009-2015. Multiple regression models are used to test research hypotheses. Furthermore, Chow and Hausman tests are selected to choose among hybrid, fixed and random effects models.FindingsThe findings show no significant relationship between audit quality and audit fees stickiness. The authors also find that financial crisis has no impact on the association between audit quality and audit fees stickiness.Originality/valueThe current study almost is the first study, which conducted in emerging market of Iran. So, the results may play a helpful role for developing nations. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Reporting and Accounting Emerald Publishing

The impact of financial crisis on audit quality and audit fee stickiness: evidence from Iran

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Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
1985-2517
DOI
10.1108/JFRA-04-2017-0025
Publisher site
See Article on Publisher Site

Abstract

PurposeThere is a few studies about stickiness and changes in audit fees. In previous studies, researchers focused on fees behavior, which is expected to change in the short term, regardless of mentioning stickiness of fees and its possible changes. In this study, the authors investigate stickiness of audit fees and the influential factors, specifically audit quality and financial crisis in an emerging economy.Design/methodology/approachAudit quality is examined under three main criteria, namely, auditor size, auditor industry specialization and auditor tenure. The Altman adjusted bankruptcy model is used to identify firms’ financial crisis. In this study, listed companies in Tehran stock exchange market is investigated during the period of 2009-2015. Multiple regression models are used to test research hypotheses. Furthermore, Chow and Hausman tests are selected to choose among hybrid, fixed and random effects models.FindingsThe findings show no significant relationship between audit quality and audit fees stickiness. The authors also find that financial crisis has no impact on the association between audit quality and audit fees stickiness.Originality/valueThe current study almost is the first study, which conducted in emerging market of Iran. So, the results may play a helpful role for developing nations.

Journal

Journal of Financial Reporting and AccountingEmerald Publishing

Published: Jun 24, 2019

References