Download or read book Do Family Firms Pay More Attention to Audit Fees and Audit Choices Than Non Family Firms written by Javad Izadi and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: PurposeThe main aim of this paper is to examine auditor choice and audit fees in family firms on the Tehran Stock Exchange.Design/methodology/approachThe hypotheses set are tested by analysing all firms except financial firms listed on the Tehran Stock Exchange for the period of 10 years, using a sample of 1,050 firm-year observations. Probity and ordinary least squares regression (OLS) is used to investigate the associations proposed in the research hypotheses.FindingOur findings show that in family firms, in contrast with non-family firms, the large auditor is less often selected as the firm's auditor. The findings also show that family firms pay higher fees for their audits in comparison with non-family firms and show that the choice of a large auditor reduces the relationship between family ownership and audit fee. The additional analysis shows that choosing industry specialist auditors is less likely in family firms compared to non-family firms.Practical implicationsThe importance of this research is in the increased awareness for researchers and users about family ownership and the selection of auditors and audit fees in the emerging market capitalization of Iran. This research contributes to the accounting literature by providing empirical evidence of the effects of family control and ownership on audit pricing and auditor choice in a developing economy context. Also, this research can provide a new route for research on this issue in developing countries, e.g., Iran.Originality/valueThese findings were discovered by means of the financial data in the particular environmental conditions of Iran which differ from the features and conditions for institutional investors in developed countries.

Download or read book Auditor Choice and Audit Fees in Family Firms written by Joanna L.Y. Ho and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine auditor choice and audit fees in family firms using data from Standard & Poor's (S&P) 1500 firms. We find that, compared to non-family firms, family firms are less likely to hire top-tier auditors due to the less severe agency problems between owners and managers. Our results also show that family firms, on average, incur lower audit fees than non-family firms, which is driven by family firms' lower demand for external auditing services and auditors' perceived lower audit risk for family firms. Our additional analysis indicates that the tendency of family firms to hire non-top-tier auditors and to pay lower audit fees is stronger when family owners actively monitor their firms.

Download or read book Audit Fees Auditor Choice and Stakeholder Influence written by Arifur Khan and published by . This book was released on 2015 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Despite the dominance of family-owned publicly listed companies in developing economies, prior research has paid relatively little attention to this area, and the socio-economic context of these countries has been mostly ignored. This study contributes to the accounting literature by providing empirical evidence of the effects of family control and ownership on audit pricing and auditor choice in a developing economy context. Using 1,058 firm-year observations of publicly listed companies in Bangladesh, where family firms are the most dominant form of public companies, we determine that in comparison with non-family firms, our sample family firms pay significantly lower audit fees and tend to choose lower quality auditors. However, for export oriented industries, family firms seem to pay significantly higher audit fees and recruit better quality auditors compared to non-family firms, indicating stakeholder power. Collectively, our findings have important implications for audit markets in emerging economies in which the sustainability of family firms is crucial for overall economic development.

Download or read book Accounting Choices in Family Firms written by Silvia Ferramosca and published by Springer. This book was released on 2018-03-13 with total page 276 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book provides a critical analysis of the current state of knowledge on the relationship between family firms and a wide range of accounting choices, including earnings management, accounting conservatism, and financial and non-financial disclosure. In examining the choices made in family firms, the authors explore and elucidate the relevance of agency, socioemotional wealth, stewardship, and resource-based theories. Readers will also find close consideration of the impacts of a country’s culture and societal values on accounting choices. In particular, further evidence is provided on the impact of different cultures on accounting conservatism in family businesses. Finally, avenues for future accounting research on family firms are discussed, highlighting theoretical and empirical challenges. In addition to offering a revealing analysis of the influence of ownership types and cultures on accounting choices within family firms, the book identifies significant practical implications for the management of family firms and policy implications for regulators and standard setters.

Download or read book Industry Specialist Auditors and Audit Fees in Family Firms written by Fei Kang and published by . This book was released on 2012 with total page 87 pages. Available in PDF, EPUB and Kindle. Book excerpt: I examine whether and how family firms' unique ownership structure and agency problems affect their choice of industry-specialist auditors and the level of audit fees. Following prior literature, I define family firms as those in which members of the founding family continue to hold positions in top management, sit on the board, or are blockholders. Compared to non-family firms, family firms are subject to less severe Type I agency problems due to family owners' long-term horizon and close monitoring of managers, but face more severe Type II agency conflicts due to the concentrated ownership and excess of control rights over cash flow rights held by family owners. Using data from the S & P 1500 firms, I find that family firms are more likely to appoint industry-specialist auditors and incur lower audit fees than non-family firms. The results suggest that family firms have strong incentives to hire industry specialists to signal the quality of their financial reporting due to the Type II agency problems, and that they have lower assessed audit risk and less demand for external audit services due to the mitigated Type I agency problems. My additional analysis shows that, compared to family firms without dual-class shares, family firms with dual-class shares have higher demand for industry-specialist auditors to signal firms' disclosure quality. Furthermore, my results indicate that, when family members serve as CEOs, firms have a stronger tendency to hire industry specialists and to pay lower audit fees. In addition, although family firms have a higher likelihood of hiring industry-specialist auditors than non-family firms, I find no evidence that family firms purchase more non-audit services from their incumbent auditors.

Download or read book Audit Fees in Family Firms written by Chiraz Ben Ali and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Family businesses are an important part of the world economy (Anderson and Reeb, 2003) and differ considerably from non-family firms with regard to corporate governance. However, despite their difference, family businesses have received relatively little research attention. Our study contributes to this growing research by empirically investigating the relationship between family shareholding and audit pricing. Using a sample of 3,291 firm-year observations of major U.S. listed companies, for the 2006-2008 period, our results demonstrate that audit fees are negatively associated with family shareholding after taking into account time-varying effects and industry effects as well as traditional control variables. The empirical results are robust to alternative family shareholding measures and estimation model specifications. Our results are consistent with the convergence-of-interests hypothesis suggesting that family firms face lower manager/shareholders agency costs. Auditors charge lower fees for family firms because of lower information asymmetry and risk given that the controlling family is well informed about the firm and is better able to monitor managerial decisions.

Download or read book Are Family Firms More Audit Risky Analyzing Audit Fees Hours and Rates written by Menachem (Meni) Abudy and published by . This book was released on 2023 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine differences in audit scope between family and non-family firms in Israel, using a unique database that includes both external and internal audit fees, hours, and billing rates. Consistent with prior literature, we argue that the number of audit hours reflects an auditor's effort, and the hourly rate reflects the auditor's risk premium. We find that external auditors exert less effort and charge lower hourly rates for family firm engagements than for non-family firm engagements. Moreover, internal audit efforts are lower in family firms than in non-family firms. Using a sub-sample of firms that switched from family to non-family status and vice-versa, we provide evidence on the causal relationship between family firm status and the scope of the audit. Our results mean that auditors reduce the scope of the audit in family firms because they perceive these firms to be less audit-risky. Nevertheless, we find that the reporting quality of family firms is higher than that of non-family firms.

Download or read book Earnings Quality written by Jennifer Francis and published by Now Publishers Inc. This book was released on 2008 with total page 97 pages. Available in PDF, EPUB and Kindle. Book excerpt: This review lays out a research perspective on earnings quality. We provide an overview of alternative definitions and measures of earnings quality and a discussion of research design choices encountered in earnings quality research. Throughout, we focus on a capital markets setting, as opposed, for example, to a contracting or stewardship setting. Our reason for this choice stems from the view that the capital market uses of accounting information are fundamental, in the sense of providing a basis for other uses, such as stewardship. Because resource allocations are ex ante decisions while contracting/stewardship assessments are ex post evaluations of outcomes, evidence on whether, how and to what degree earnings quality influences capital market resource allocation decisions is fundamental to understanding why and how accounting matters to investors and others, including those charged with stewardship responsibilities. Demonstrating a link between earnings quality and, for example, the costs of equity and debt capital implies a basic economic role in capital allocation decisions for accounting information; this role has only recently been documented in the accounting literature. We focus on how the precision of financial information in capturing one or more underlying valuation-relevant constructs affects the assessment and use of that information by capital market participants. We emphasize that the choice of constructs to be measured is typically contextual. Our main focus is on the precision of earnings, which we view as a summary indicator of the overall quality of financial reporting. Our intent in discussing research that evaluates the capital market effects of earnings quality is both to stimulate further research in this area and to encourage research on related topics, including, for example, the role of earnings quality in contracting and stewardship.

Download or read book Client Acceptance and Engagement Pricing Following Auditor Resignations in Family Firms written by Samer Khalil and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates whether auditors' client acceptance and pricing decisions following the resignation of the incumbent auditor in family firms are significantly different from those in non-family firms. Relying on the auditing literature (client acceptance and audit pricing) and using insights from the agency theory, we document that successor auditors incorporate a firm's ownership structure into their acceptance and pricing decisions following the resignation of the incumbent auditor. Big4 auditors are more likely to serve as successor auditors following auditor resignations in family firms as opposed to non-family firms. The changes in audit fees following auditor resignations in family firms, however, are significantly smaller than those in non-family firms. These results hold when we account for whether a family firm is managed by a founder, a descendant, or by a professional manager, and when we use the percentage of shares held by the family members as another proxy for family ownership. Additional analysis further demonstrates that the likelihood of financial restatements in family firms in the post-resignation period are significantly lower than those in non-family firms. Overall, our findings suggest that Big4 auditors perceive family firms from whom the incumbent auditors resigned as being less risky than their non-family counterparts.

Download or read book Performance and Behavior of Family Firms written by Esra Memili and published by MDPI. This book was released on 2018-03-23 with total page 174 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is a printed edition of the Special Issue "Performance and Behavior of Family Firms" that was published in IJFS

Download or read book The Risk of Fraud in Family Firms written by Gopal V. Krishnan and published by . This book was released on 2017 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: There is a dearth of business ethics research on family firms, despite the importance of such firms to the U.S. economy (Vazquez 2016). We answer Vazquez's (2016) call to examine the intersection of family firms research and business ethics, by investigating whether external auditors assess higher risk of fraud in family firms. We test the contradictory predictions of two dominant theoretical perspectives in family-firm research -- entrenchment theory and alignment theory. We conduct an experiment with highly experienced external audit professionals, who assess the risk of fraud and make client acceptance decisions for family firms versus non-family firms with different strength of corporate governance: strong versus weak audit committees (AC). We find that auditors assess the risk of fraud as higher for family firms than for non-family firms, consistent with the predictions of entrenchment theory. Auditors are also less likely to make client acceptance recommendations for family firms. The strength of the AC moderates the family-firm effect, whereby auditors assess family firms with weak ACs to have the highest fraud risk, and to be the least desirable audit clients. Our findings suggest that auditors perceive more severe agency conflicts to be present in family firms than in non-family firms, consistent with entrenchment theory, according to which family members may behave opportunistically to extract rents and potentially expropriate the firm's resources at the expense of minority shareholders.

Download or read book Fees Paid to Audit Firms Accrual Choices and Corporate Governance written by David F. Larcker and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the relation between the fees paid to auditors for audit and non-audit services and the choice of accrual measures for a large sample of firms. Using our pooled sample, we find that the ratio of non-audit fees to total fees has a positive relation with the absolute value of accruals similar to Frankel et al. (2002). However, using latent class mixture models to identify clusters of firms with a homogenous regression structure reveals that this positive association only occurs for about 8.5 percent of the sample. In contrast to the fee ratio results, we find consistent evidence of a negative relation between the level of fees (both audit and non-audit) paid to auditors and accruals (i.e., higher fees are associated with smaller accruals). The latent class analysis also indicates that this negative relation is strongest for client firms with weak governance. Overall, our results are most consistent with auditor behavior being constrained by the reputation effects associated with allowing clients to engage in unusual accrual choices.

Download or read book Accounting firm consolidation selected large public company views on audit fees quality independence and choice written by and published by DIANE Publishing. This book was released on with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Data Management Analytics and Innovation written by Neha Sharma and published by Springer Nature. This book was released on 2019-10-24 with total page 740 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book presents the latest findings in the areas of data management and smart computing, big data management, artificial intelligence and data analytics, along with advances in network technologies. It addresses state-of-the-art topics and discusses challenges and solutions for future development. Gathering original, unpublished contributions by scientists from around the globe, the book is mainly intended for a professional audience of researchers and practitioners in academia and industry.

Download or read book Auditor Provided Non Audit Services in Listed and Private Family Firms written by Michael Dobler and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Purpose - The aim of this paper is to provide evidence on the extent and the consequences of the provision of non-audit services (NAS) by statutory auditors to German family firms.Design/methodology/approach - The study analyzes hand collected fee data of 368 listed and private family firms in Germany. It employs univariate tests, OLS and 2SLS regressions to investigate potential threats to perceived auditor independence and knowledge spillovers between jointly provided NAS and audit services.Findings - Incumbent auditors are shown to be a significant source of various types of NAS to family firms. There is weak evidence on threats to perceived auditor independence and support for reciprocal knowledge spillovers between the services. While listed and private family firms do not differ in regard to the proportion of NAS fees, comparative findings suggest that key threats and benefits of jointly provided services are more prevalent among private than among listed family firms.Research limitations/implications - The study suffers from limited data availability and is restricted to the initial year of mandatory audit fee disclosure of private firms in Germany. Particularities of family firms and the German setting as well as differential results for listed and private family firms suggest fruitful avenues for future research.Practical implications - The study addresses current issues in audit regulation. Regulatory bodies should consider that key threats and benefits of auditor-provided NAS decrease with stronger exogenous restrictions. Attempts to restrict jointly provided services in the EU suggest family firms to reconsider their reliance on auditors as a trusted source of NAS.Originality/value - This study is the first to provide evidence on the extent and consequences of auditor-provided NAS in family firms based on fee disclosure. It is also among the few studies that investigate private firms in a code law country and complements prior evidence from Germany that is restricted to listed firms. More generally, it contributes to limited evidence at the intersection of audit and family business research.

Download or read book Auditor Resignations and Firm Ownership Structure written by Samer Khalil and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper investigates whether firm ownership structure alters the likelihood of auditor resignations and the associated stock market reaction in the U.S. over the period 2004-2008. Relying on prior research, we posit that family ownership aligns family members' interests with those of minority shareholders reducing the likelihood of auditor resignations and attenuating the associated stock market reaction, especially in family firms managed by professional or founder CEOs. Logistic regression documents a lower likelihood of auditor resignations in family firms and in family firms managed by professional CEOs as opposed to non family firms. It also shows that auditors of family firms managed by descendant CEO (founder CEO) are more (less) likely to resign than those auditing family firms managed by a professional CEO (descendant CEO). OLS Regression documents that abnormal returns following auditor resignations in family firms and in family firms managed by a professional CEO are higher (less negative) than those in non family firms. Abnormal returns, however, do not vary based on whether a family firm is managed by a descendant or founder CEO. Results are robust to the selection bias arising from family ownership and contribute to the literature investigating auditor resignations and firm ownership structure.

Download or read book Auditor Choice and Its Implications for Group Affiliated Firms written by Junxiong Fang and published by . This book was released on 2015 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine which of two opposing financial reporting incentives that group-affiliated firms experience shapes their accounting transparency evident in auditor choice. In one direction, complex group structure and intra-group transactions enable controlling shareholders to pursue diversionary activities that they later hide by distorting reported earnings. In the other direction, as outside investors price protect against potential expropriation, controlling shareholders may be eager to improve financial reporting quality in order to alleviate agency costs. To empirically clarify whether group affiliation affects company insiders' incentives to address minority shareholders' concerns over agency costs, we examine auditor selection of group firms relative to stand-alone firms. In comparison to non-group firms, our evidence implies that group firms are more likely to appoint Top 10 audit firms in China, especially when their controlling shareholders have stronger incentives to improve external monitoring of the financial reporting process. After isolating group firms, we find that the presence of a Top 10 auditor translates into higher earnings and disclosure quality, higher valuation implications for related-party transactions, and cheaper equity financing, implying that these firms benefit from engaging a high-quality auditor. In additional analysis consistent with our predictions, we find that group firms that are Top 10 clients pay higher audit fees and their controlling shareholders are more constrained against meeting earnings benchmarks through intra-group transactions and siphoning corporate resources at the expense of minority investors. Collectively, our evidence supports the narrative that insiders in firms belonging to business groups weigh the costs and benefits stemming from auditor choice.