The effect of audit firm attributes on audit delay in the presence of financial reporting complexity
ISSN: 0268-6902
Article publication date: 10 January 2022
Issue publication date: 21 January 2022
Abstract
Purpose
This study aims to examine the effects of audit firm attributes on audit delay associated with financial reporting complexity (FRC).
Design/methodology/approach
The authors use regression models with a sample of public firms with distinct monetary eXtensible Business Reporting Language tags to test the research hypotheses.
Findings
The authors find that two audit firm attributes (audit firm tenure and non-audit services performance) moderate the effect of FRC on audit delay.
Practical implications
The study provides insights to regulators, practitioners and investors into how firms may reduce audit delay from FRC by keeping their long-tenured auditors and allowing their auditors to gain more knowledge about the firms by providing non-audit services. The results, therefore, have implications for mandatory audit firm rotation.
Originality/value
To the best of the knowledge, this study conducts the first comprehensive analysis of this topic, exploring the impact of three audit firm attributes on audit delay caused by FRC. It attempts to illustrate the impact of external audit firms on reducing the adverse consequences of FRC.
Keywords
Acknowledgements
The authors thank Jie Zhou (Editor-in-Chief) and Ittonen Kim (Associate Editor). This manuscript has greatly benefited from constructive feedback of two anonymous reviewers. The authors also thank Kenn Webb, Shareholder in the law firm Ferguson Braswell Fraser Kubasta PC of Plano, Texas, for his valuable insights and editorial contributions.
Citation
Chen, C., Jia, H., Xu, Y. and Ziebart, D. (2022), "The effect of audit firm attributes on audit delay in the presence of financial reporting complexity", Managerial Auditing Journal, Vol. 37 No. 2, pp. 283-302. https://doi.org/10.1108/MAJ-12-2020-2969
Publisher
:Emerald Publishing Limited
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