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Article
Publication date: 1 September 2022

Li (Lily) Zheng Brooks, Susan Gill, Bernard Wong-On-Wing and Michael D. Yu

This study aims to examine the moderating effect of audit firm tenure on the association between corporate social responsibility (CSR) and firm value. Prior studies provide mixed…

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Abstract

Purpose

This study aims to examine the moderating effect of audit firm tenure on the association between corporate social responsibility (CSR) and firm value. Prior studies provide mixed results on this association, which may be due to differing theoretical expectations related to CSR and firm value. It is also possible that external stakeholders are unable to differentiate between positive and negative CSR investments, as CSR reports are generally not assured by independent third parties. Thus, the authors propose that audit firm tenure may be used by external stakeholders to evaluate CSR performance.

Design/methodology/approach

The authors use an ordinary least squares regression to examine the moderating effect of audit firm tenure on the relation between CSR and firm value after controlling for other determinants of firm value and various internal and external governance mechanisms documented in the literature. The sample consists of 15,707 firm-year observations from US firms during the sample period of 2000 to 2012. The authors measure CSR quality using rating scores from MSCI ESG STATS (formerly the KLD database), audit firm tenure as the number of years the incumbent auditor has served the client and firm value using Tobin’s Q.

Findings

The results indicate that CSR is positively associated with firm value when audit firm tenure is long but not when tenure is short. The results are robust to alternative measures of firm value, CSR performance scores, and individual CSR dimensions. The evidence supports the argument against mandatory audit firm rotation in the USA.

Research limitations/implications

Future studies could examine a similar issue in alternative settings and/or look at cross-sectional variations among firms on the association between CSR and firm value by other auditor traits such as auditor industry specialization and big-name reputation. Additionally, as auditor alone is unable to ensure the quality of management disclosures and their accountability, future studies could examine the moderating effect of internal and other external governance mechanisms on the association between CSR and firm value, exploring when the signaling effect of auditor tenure on CSR reporting quality and its effect on firm value is most salient.

Practical implications

The findings are important to regulators and investors. The authors provide evidence that longer audit tenure serves as a signaling device for external investors with regard to the quality of a firm’s CSR performance. Hence, the study facilitates regulators’ cost-benefit analysis related to mandating audit firm rotation. The evidence suggests that mandating a term limit on auditor tenure may have the unintended consequence of eliminating a signaling effect of auditor tenure on the quality of CSR disclosures under information asymmetry. This supports the Public Company Oversight Board’s decision to forgo the requirement of mandatory audit firm rotation in the USA.

Originality/value

Prior literature presents mixed findings on the association between CSR performance and firm value based on a variety of underlying theories (economic, stakeholder and contingency theory). Literature on mandatory auditor rotation has concentrated on the auditor tenure effect on perceived and actual audit quality as reflected in earnings quality. Relying on agency theory, this study posits that auditor tenure serves as a signal for the quality of CSR activities in the absence of CSR assurance reporting as CSR quality can be difficult to evaluate. The authors provide evidence that audit tenure moderates the association between CSR activities and firm value and longer audit tenure makes it more likely that the CSR activities are associated with increased firm value.

Details

Managerial Auditing Journal, vol. 37 no. 8
Type: Research Article
ISSN: 0268-6902

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Article
Publication date: 30 August 2021

Yun Cheng, Christine M. Haynes and Michael D. Yu

Auditing studies have shifted the research focus from the audit firm level to the individual audit partner level in recent years. Motivated by the call from Lennox and Wu (2018…

1627

Abstract

Purpose

Auditing studies have shifted the research focus from the audit firm level to the individual audit partner level in recent years. Motivated by the call from Lennox and Wu (2018) to explore the effect of audit partners’ characteristics on audit quality in the US, this study aims to develop a new measure of engagement partner workload (EPW), which includes both the size and number of clients audited to test the effect of EPW on audit quality. This study also examines the moderating effect of the partner firm size on audit quality.

Design/methodology/approach

To test the effect of the EPW on audit quality, this study runs multivariate regressions of EPW on each specific client’s discretionary accruals and audit report delays. This study also runs a logistic regression of EPW on clients’ probability of having small profit increases to meet performance benchmarks.

Findings

Results of the hypotheses show that partner workload is positively related to audit quality. The results indicate that partners with larger, but fewer, clients conduct higher quality audits. Further analysis indicates that the relationship between partner workload and audit quality only holds for partners from the non-Big 4 firms.

Originality/value

This study contributes to the literatures of both audit quality and audit partner characteristics, and the results complement initial research aimed at identifying US partner-related characteristics that influence audit quality.

Details

Managerial Auditing Journal, vol. 36 no. 8
Type: Research Article
ISSN: 0268-6902

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Book part
Publication date: 9 October 2020

Ali C. Akyol

Abstract

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Corporate Fraud Exposed
Type: Book
ISBN: 978-1-78973-418-8

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The Global Evolution, Changing Landscape and Future of Financial Markets
Type: Book
ISBN: 978-1-83549-331-1

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Article
Publication date: 1 April 2005

Xiaojun Wu, Weijun Liu and Michael Yu Wang

The representation of Heterogeneous Object (HO) is divided into two categories: Data model (DM) and material evaluation paradigm (MEP). A hybrid methodology with geometry model…

94

Abstract

The representation of Heterogeneous Object (HO) is divided into two categories: Data model (DM) and material evaluation paradigm (MEP). A hybrid methodology with geometry model and volumetric dataset to represent heterogeneous properties is proposed in this paper. Geometry model of an object can guarantee the accuracy of the final HO slices; and volumetric dataset lends the flexible manipulability and other advantages to HO representation. Two MEPs, namely distance field (DF) based and Fixed Reference Features & Active Grading Source(s) (FRF&AGS) are presented to facilitate the process of HO representation according to the designer)s input parameters. The DM can be modified interactively with users until the final satisfactory result is obtained. In this paper, a scheme of HO slicing is described. In this method, we utilize the slices contour of geometrical model as constraint to reconstruct the HO slices, which can theoretically achieve the same accuracy with the geometrical shape. Some examples of Heterogeneous object represented with our scheme are provided.

Details

Multidiscipline Modeling in Materials and Structures, vol. 1 no. 4
Type: Research Article
ISSN: 1573-6105

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Available. Content available
Book part
Publication date: 8 December 2004

Abstract

Details

Environmental Policy International Trade and Factor Markets
Type: Book
ISBN: 978-0-44451-708-1

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Book part
Publication date: 10 December 2024

Michael Brown and Anica Zeyen

This chapter suggests that self-employment or entrepreneurship can constitute an alternative to employment for neurodivergent people. While this is a suitable and successful…

Abstract

This chapter suggests that self-employment or entrepreneurship can constitute an alternative to employment for neurodivergent people. While this is a suitable and successful option for many, we explore the experience of one entrepreneur who was, and remains, very reluctant in his entrepreneurial endeavors. We use Michael's firsthand autobiographical accounts to showcase his struggle before and during entrepreneurship and its impact on his physical and mental health. We conclude with some reflections on his experience and highlight what the literature on neurodivergent entrepreneurs can learn from it.

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Neurodiversity and Entrepreneurship
Type: Book
ISBN: 978-1-83753-798-3

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Article
Publication date: 1 April 2003

Georgios I. Zekos

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some…

101306

Abstract

Aim of the present monograph is the economic analysis of the role of MNEs regarding globalisation and digital economy and in parallel there is a reference and examination of some legal aspects concerning MNEs, cyberspace and e‐commerce as the means of expression of the digital economy. The whole effort of the author is focused on the examination of various aspects of MNEs and their impact upon globalisation and vice versa and how and if we are moving towards a global digital economy.

Details

Managerial Law, vol. 45 no. 1/2
Type: Research Article
ISSN: 0309-0558

Keywords

Available. Content available
Book part
Publication date: 30 July 2018

Abstract

Details

Marketing Management in Turkey
Type: Book
ISBN: 978-1-78714-558-0

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Article
Publication date: 8 January 2018

Kathleen B. Aviso, Sed Anderson K. Holaysan, Michael Angelo B. Promentilla, Krista Danielle S. Yu and Raymond R. Tan

The onset of climate change is expected to result in variations in weather patterns which can exacerbate water scarcity issues. This can potentially impact the economic…

470

Abstract

Purpose

The onset of climate change is expected to result in variations in weather patterns which can exacerbate water scarcity issues. This can potentially impact the economic productivity of nations as economic activities are highly dependent on water especially for agricultural countries. In response to this, the concepts of virtual water and water footprint have been introduced as metrics for measuring the water intensity of products, services and nations. Researchers have thus looked into virtual water trade flows as a potential strategy for alleviating water scarcity. The paper aims to discuss these issues.

Design/methodology/approach

Environmentally extended input-output models (IOMs) are often used to analyze interactions between economic and ecological systems. This work thus develops a multi-regional input-output model for optimizing virtual water trade between different geographic regions in consideration of local environmental resource constraints, product demands and economic productivity.

Findings

A case study on agriculture crop production and trade in different regions of the Philippines is utilized to demonstrate the capabilities of the model. The results show that the optimal strategy does not necessarily limit a water-scarce region to produce less water-intensive crops.

Research limitations/implications

The model uses an input-output framework whose fixed coefficients reflect a fixed technological state. As such, the model is best used for short-term projections, or projections for mature technological state (i.e. where no major gains in efficiency or yield can be foreseen).

Practical implications

The proposed modeling framework can be used in any geographic region (provided relevant statistical data are available for calibration) to provide decision support for optimal use of limited water resources.

Originality/value

The model proposed in this work has general applicability to the optimal planning of agro-industrial systems under water footprint constraints. This modeling approach will be particularly valuable in the future, as climate change causes changes in precipitation patterns and water availability.

Details

Management of Environmental Quality: An International Journal, vol. 29 no. 1
Type: Research Article
ISSN: 1477-7835

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