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The purpose of this study is to examine the impact of corporate sustainability performance on the quality of financial reporting, proxied via the probability of external auditors, to offer a qualified audit opinion. Moreover, the impact of audit committee (AC) independence is considered as a mediating factor affecting the quality of sustainability performance and the opinion of external financial auditors.

This study is based on a sample of listed firms from 24 EU countries over the period 2003–2019, summing up to 144,317 firm-year observations. Panel logistic regression models were estimated.

Results indicated that firms with increased sustainability performance were less probable to receive a qualified audit opinion, suggesting that sustainability performance complements the quality of financial reporting. In addition, this negative association was significant for firms with above-average AC independence, verifying the mediating impact of firms’ governance structure on the quality of financial reporting.

This study quantifies a broader data set of sustainability information and uses a multi-country framework (24 EU countries), thus providing more concrete evidence on the issue, extending the study by Tuo et al. (2023). Also, this study responds to calls for more research on the mediating role of ACs made by Velte (2023) and Stuart et al. (2023) on the impact of sustainability performance on qualified audit opinion.

This study aims to examine auditors’ perceptions of the changes in audit processes, fees, salaries and trainings during the Lebanese multidimensional crisis. The aim is to understand how going concern assessments were affected by the distortions imposed by the crisis.

Data was collected through a survey distributed among auditors at Big 4 audit firms in Lebanon during the crisis. The questionnaire, inspired by prior desk study research, aims to empirically assess auditors’ attitudes toward the variances in audit operations during the crisis and their implications on going concern assessments. This study uses the structural equation modeling (SEM) technique to develop and assess the research model.

The findings reveal notable changes in audit processes, fees, salaries and training programs during the crisis. SEM results highlight the association between the crisis-driven changes in audit procedures, fees and salaries and the increased uncertainty in issuing going concern assessments.

This study provides recommendations for both the auditing industry and regulatory bodies to ensure audit firms are prepared to face crises that might disrupt their work. Recommendations include the initiation of crisis management training programs, investments in technology solutions, the establishment of a protocol in response to crisis and the adoption of flexible yet reliable audit procedure to accommodate for the challenges of the crisis.

The originality of this study emanates from its adoption of a novel survey to assess a conceptual model that has not been empirically tested in earlier studies. The model examines changes in audit operations during the Lebanese crisis and their implications on going concern assessments, a context that has received little attention in the literature.

This study aims to investigate the impact of audit partners’ narcissism on the readability of audit reports for companies listed on the Tehran Stock Exchange (TSE). It examines the effects of narcissism among both lead and review audit partners on the clarity of audit reports, considering the regulatory requirements and auditing practices within the Iranian financial reporting context.

This paper analyzed 2,691 firm-year observations from TSE-listed companies spanning 2011–2023, using ordinary least squares regression. Readability of audit reports was assessed using the FOG index, with the size of partners’ signatures serving as a proxy for narcissism.

The findings indicate a significant negative relationship between increased narcissism and audit report readability; higher levels of narcissism correspond with elevated FOG index scores. Narcissism in lead partners notably diminishes readability more than that of review partners. This pattern holds across various robustness checks, including alternative readability metrics, variations in auditor engagement complexity, auditor specialization, subsets of qualified audit reports and considerations for endogeneity. Audit reports for economically significant clients tend to be clearer, suggesting a preference for reputation management over yielding to client pressure. Although no direct link was established between partners’ quality and readability, a positive relationship exists between audit firm rank and partners’ narcissism. Furthermore, interactions between auditor and CEO narcissism increase report complexity, especially in contentious negotiation scenarios. Despite regulatory advancements such as International Auditing Standard 701, its moderating effects were found to be inconsequential, highlighting the persistent influence of narcissism on audit report outcomes.

This research expands the understanding of how auditor personality traits, particularly narcissism, affect audit outcomes. By exploring the influence of narcissism on report readability within the Iranian context, this study fills a notable gap in the literature on emerging markets and non-Western reporting environments, providing valuable insights into global audit practices.

This paper aims to explore the potential effect of key audit matters (KAM) on the audit report lag (ARL). In particular, it aims to discover whether the number of KAMs reported by an audit firm in Jordan is related to the length of its ARL.

The authors analysed data from the first three years of KAM reporting in Jordan (2017–2019) for 194 public listed Jordanian companies to examine the relation between the number of KAMs and the ARL, taking into account several control variables related to the Jordanian context.

This study found that there is no statistically significant relation between the number of KAMs reported by Jordanian audit firms and their ARLs, suggesting that the KAM reporting in Jordan is somewhat superficial, with the selection of what is actually reported as a KAM not directly related to the efforts needed to deal with its concerns. However, this study also found statistically significant positive relations between the ARL and each of audit fees, audit firm size, the issuance of a qualified audit opinion and company leverage and a statistically significant negative relation between the ARL and company profitability.

This is one of the very few studies to cover the potential relation between KAM reporting and the ARL. In a developing country context characterised by limited demand for an external audit of high quality, this study finds that auditors may decouple on their reporting of KAMs by not actually making significant efforts to deal with them.

We examine the content of auditors’ going concern opinions (GCOs) to investigate how the market reacts to particular explanations and to the overall number of reasons presented by auditors. We investigate whether the market reacts differentially to explanatory paragraphs alluding to specific financial concerns emphasized in the finance literature: reductions in expected future cash flows, difficulties with short-term liquidity and violations of debt covenants. Finally, we examine whether GCOs that are ex-post accurate, as indicated by a subsequent bankruptcy, are accompanied by more negative reactions.

We regress cumulative abnormal returns on the number of reasons cited by auditors and indicator variables for whether auditors cited concerns pertaining to future cash flows, debt covenant violations or short-term cash holdings. We include an indicator for subsequent bankruptcy and control variables.

The market reaction to GCOs is significantly more negative when auditors offer more reasons or specifically cite a decrease in expected future cashflows or a violation of debt covenants and when GCOs are ex-post accurate.

The results indicate that auditors’ explanations for GCOs contain incremental information content that is useful to investors.

We find that more detailed GCO reports are more informative to investors, supporting the need for regulations requiring auditors to provide detailed justifications when issuing GCOs.

This study is the first to examine how the number of reasons given by auditors affects market reactions to GCOs and to specifically examine how investors react to GCOs that cite violations of debt covenants or reductions in future cash flows as justifications for the GCO.

This study aims to investigate whether the communication between the external auditor and the audit committee (AC) impacts audit quality.

The authors use textual analysis to develop a new auditor–AC communication metric based on public AC performance reports for the period 2013–2021 in China. The authors also use both high-dimensional fixed effects linear regression and logistic regression to examine the effect of auditor–AC communication on audit quality.

By correlating this new auditor–AC communication metric with established proxies for audit quality, as outlined by DeFond and Zhang (2014), the authors find that firms with more auditor–AC communication have higher financial reporting quality, a lower probability of material misstatements and more informative audit reports. Overall, auditor–AC communication contributes to the improvement of audit quality.

The findings offer both practical and policy-oriented implications, particularly for policymakers in search of quantifiable audit quality indicators derived from the interactions between the auditor and the AC.

The study advances the field of audit quality by introducing a novel metric for auditor–AC communication. It provides empirical evidence to support the notion that the communication between the external auditor and the AC can improve audit quality.

This paper aims to examine the effects of the 2014 European regulatory reform on auditors’ activity, the audit outcome and the audit market, with a focus on the Spanish market.

The research is based on in-depth, semistructured interviews with partners of the main audit firms operating in the Spanish market. This qualitative approach provides a precise identification of the cause-effect relationships of the new measures introduced by the European audit regulation.

The findings indicate that, based on auditors’ opinions, the costs of the main regulatory changes outweigh the benefits. The European Union (EU) Audit Regulation imposes more demanding provisions, such as an extended auditor’s report, mandatory audit firm rotation, more banned nonaudit services and stricter quality controls, resulting in substantial side effects on audit activity and the audit market. This could undermine the objective of enhancing the quality of audit services.

To the best of the authors’ knowledge, this is the first study to analyze the effect of the 2014 EU regulatory reform on audit activity, audit market and audit outcome based on auditors’ perceptions. The findings may be of interest to academics, professionals and regulators alike, as they offer valuable insights for assessing the effectiveness of the new audit provisions. Additionally, the qualitative methodology used facilitates a causal analysis of the key elements introduced by the regulations, potentially paving the way for future research avenues.

The purpose of this paper is to report a study of public accountability within the political and economic structures that characterise Pacific nations. The authors examine audit quality with respect to Pacific Island nations’ governmental reporting to investigate ways to improve accountability in a region that is economically and environmentally challenged.

The authors examine whether audit quality in Pacific Island nations is associated with the practical arrangements of Supreme Audit Institutions (SAIs), taking into account external factors. The “practical arrangements” include the independence of a SAI (regarding its staffing and funding) and also the requirement for it to report to the Executive. The financial setting in each jurisdiction has been seen to impact the quality of financial reporting and auditing. The authors examine mediating factors such as income, political stability and education that may also impact audit quality. This study uses publicly available databases as well as jurisdictional annual reports and the associated audit opinions and management letters (where available). Jurisdictional reports on public financial management were also analysed.

The authors find that public sector audit quality is low in many Pacific countries, concluding that public accountability is impaired. While the authors recommend changes to the practical arrangements that can improve audit quality, the mediating factors also impact audit quality. They argue that a renewed focus on financial capability could enhance public accountability in these nations, but there are limiting factors that are difficult to overcome.

There are problems in providing accountability for public sector activities in Pacific nations. The authors suggest that improvements to the appointment and funding of SAIs to enhance their independence will help to reduce these issues.

The authors present a framework for analysing SAIs’ practical arrangements and audit quality that includes variables that may mediate the effects of these practical arrangements. They apply the model to 20 Pacific jurisdictions, showing that the practical arrangements of a SAI directly impact audit quality. Nevertheless, there are instances where audit quality is poor despite good practical arrangements, implying that mediating factors also play a substantial role in determining audit quality of a SAI.

This study examines joint audits’ impact on financial statement timeliness in emerging markets in Kuwait.

We use a sample of nonfinancial firms listed on the Kuwait Stock Exchange from 2000 to 2020.

We find that joint audits are significantly negatively associated with financial statements’ timeliness. This suggests that firms employing two auditors (joint audits) issue their financial statements in relatively shorter periods. Our results are robust and consistent with our initial findings, even after assessing the impacts of the Big 4, profitability and firm size on them.

The findings show that mandating joint audits decreases audit report lag (ARL). We recommend that regulators and policymakers consider the potential implications of removing mandated joint audits, such as longer ARL.

This study contributes to the limited literature on joint audits and timeliness by exploring their relationship in the context of listed nonfinancial firms in an emerging market. The findings contribute to the ongoing debate about the costs and benefits of joint audits by showing the improvement of financial reporting timelines. Our findings assist regulators and policymakers in determining whether to implement or abolish joint audits.

This study aims to examine the association between audit partner busyness and audit quality. Moreover, this research investigates whether boardroom gender diversity moderates the relationship between audit partner busyness and audit quality in Australia.

The study sample consists of all public companies listed on the Australian Stock Exchange from 2005 to 2014. The data is obtained from SIRCA and the Morning Star databases. The study uses fixed effects and logistic regression techniques to test the relationship between audit partner busyness, boardroom gender diversity and audit quality.

The collected empirical evidence shows that audit partner busyness is negatively associated with audit quality. In contrast, boardroom gender diversity moderates the relationship between audit partner busyness and audit quality. More specifically, the results suggest that board gender diversity mitigates the negative impact of audit partners’ busyness on the audit quality. The results are robust to endogeneity and alternative definitions of audit partner busyness, boardroom gender diversity and audit quality.

The study’s findings will be of interest to policymakers, regulators and investors in the Australian market. The results show the importance of gender-diverse boards in companies’ audit functions, particularly in the presence of busy audit partners, and hence support the call for more women on corporate boards in Australia. Moreover, the results call for a cap or upper limit on the number of clients an audit partner can take on based on their capacity.

The authors contribute to the growing literature on board gender diversity, audit partner busyness and audit quality. Although a plethora of prior literature suggests a negative association between audit partner busyness and audit quality, the results suggest that women in the boardroom positively moderate the relationship between audit partner busyness and audit quality.