To study the effect of audit market concentration on auditors' job stress and audit quality of Tehran Stock Exchange (TSE) Listed Companies
Subject Areas : Financial AccountingFarhan Bengoriz 1 , narges Khosravipoor 2 , Nurooz Noroolahzadeh 3
1 - Department of Accounting, Kish International Branch, Islamic Azad University, Kish Island, Iran
2 - Department of Accounting, South Tehran Branch, Islamic Azad University, Tehran, Iran
3 - Department of Accounting, South Tehran Branch, Islamic Azad University, Tehran, Iran
Keywords: Audit Market Concentration, Auditors', Stress, Audit Quality,
Abstract :
Audit market concentration causes to decrease the scope of companies' au-thorities for selecting the audit institutions but instead it increases the power of auditors' market that it turns, leads to a decrease in quality and an increase in auditors' stress. The purpose of the present research is to study the effect of audit market concentration on auditors's job stress and audit quality of Tehran Stock Exchange (TSE) Listed Companies performed on a total of 97 companies between the years of 2013-2017. In order to evaluate the audit market concentration, the ratio of company's audit fees to total industry audit fees was used. The Accruals Quality model was also used to evaluate the audit quality. The results of the study showed that the audit market concentration had a negative and significant effect on the audit quality so that with the increase in audit market concentration, the audit quality is decreased. Also it was found that the audit market concentration had a posi-tive and significant effect on the auditors' job stress: it means that the in-crease of concentration on audit market as a result of time pressure can in-crease the auditors' job stress and thus the risk of financial statement assess-ment.
[1] Oxera. A. Competition and Choice in the U.K. Audit Market: Prepared for the Department of Trade and Industry and Financial Reporting Council. Oxford, U.K.: Oxera Consulting, 2006, 45(4), P.34-67 Doi:10.1016. j.adiac.2006.01.001
[2] Treasury, U.S., Advisory Committee on the Auditing Profession: Final Report. (October 6). Washington, DC: U.S. Treasury, 2008.
[3] Pearson, T., and Trompeter, G., Competition in the market for audit services: The effect of supplier concentration on audit fees, Contemporary Accounting Research, 1994, 11(1), P. 115–135.Doi:10.1111.j.1911-3846.19 94.tb00439.x
[4] Feldman, E. R. A basic quantification of the competitive implications of the demise of Arthur Andersen. Review of Industrial Organization, 2006, 29 (3), P.193–212. Doi:10.1007.s11151-006-9117-5.
[5] Carson, E., Simnett, R., Soo, B.S., and Wright, A., Changes in audit market competition and the Big N premium, Auditing: A Journal of Practice & Theory, 2012, 31(3), P. 47–73. Doi:10.2308.ajpt-10295
[6] Newton, N.J., Wang, D., and Wilkins, M.S., Does a lack of choice lead to lower quality? Evidence from auditor competition and client restatements, Auditing: A Journal of Practice and Theory, 2013, 32(3), P. 31–67. Doi: .10.2308.ajpt-50461
[7] Boone, J. P., Khurana, I.K., and Raman, K.K, Audit market concentration and auditor tolerance for earnings management, Contemporary Accounting Research, 2012, 29(4), P. 1171–1203. Doi:10.1111.j.1911-3846.2011.01144.x
[8] Francis, J. R., Michas, P. N., and Seavey, S.E., Does audit market concentration harm the quality of audited earnings? Evidence from audit markets in 42 countries, Contemporary Accounting Research, 2013, 30(1), P. 325–355. Doi:10.1111.j.1911-3846.2012.01156.x
[9] Margheim, L., Kelley, T., Pattison, D. An empirical analysis of the effects of auditor time budget pressure and time deadlinepressure, Journal of Applied Business Research, 2011, 21(1), P. 23–27. DOI: 10.19030.jabr. v21i1.1497
[10] Soobaroyen, T., Chengabroyan, C., Auditors’ perceptions of time budget pressure, premature sign offs and under-reporting of chargeable time: evidence from a developing country, International Journal Auditing, 2006, 10(3), P. 201–218. Doi:10.1111.j.1099-1123.2006.0350.x
[11] Jones, A., III, Norman, C., and Wier, B. Healthy lifestyle as a coping mechanismfor role stress in public accounting, Behavioral Research in Accounting, 2010, 22(1), P. 21-41. Doi:10.2308.bria.2010.22.1.21
[12] Liu, C., Zhang, J. Time pressure, accountability and audit judgment performance: an experimentalstudy, China Accounting Review, 2010, 4(2), P. 405–424. Doi:10.1016.j.aos.2010.09.001
[13] Watts, R. L. and Zimmerman, J. L. Agency Problems, Auditing, and the Theory of the Firm: Some Evidence, Journal of Law and Economics, 1983, 26(2), P. 613-633. Doi:10.1086.467051
[14] Joseph, G., Chad, S., Competition in the Audit Market: Policy Implications, Journal of Accounting Rsearch, 2006, 12(2), P. 1-27. Doi:10.1111.1475679X.12087.
[15] Hematfar, M., Soheili, H., An Investigation of Financing Costs Factors on the Auditor's Qualified Report in the Companies Listed in Tehran Stock Exchange. Advances in Mathematical Finance and Applications, 2017, 2(2), 19-28. doi: 10.22034.amfa.2017.531314
[16] Feurer, S., Baumbach, E., and Woodside, A. G., Applying configurational theory to build a typology of ethnocentric consumers, International Marketing Review, 2015, 33(3), P. 351–375. http:..dx.doi.org.10.1108.IMR-03-2014-0075
[17] Cormier, D., Demaria, S., Magnan, M., Beyond earnings: Do EBITDA reporting and governance matter for market participants, Managerial Finance, 2017, 43(2), P. 193–211. Doi: 10.1108.MF-07-2016-0205.
[18] Janssen, O., Fairness perceptions as a moderator in the curvilinear relationships between job demands, and job performance and jobsatisfaction, Academy of Management Journal, 2001, 44(5), P. 1039–1050. Doi:10.5465.3069447
[19] Jusoh, R., Ibrahim, D. N., Zainuddin, Y., The performance consequence of multiple performance measures usage, International Journal of Productivity and Performance Management, 2008, 57(2), P. 119-136. Doi:10.1108.17410400810847393
[20] Morgan, D.G., Semchuk K, M, Stewart, N.J., D’Arcy C., Job strain among staff ofrural nursing homes: A comparison of nurses, aides, and activity worker, The Journal of Nursing Administration, 2002, 32(3), P.152–61. Doi:10.1097%2F00005110-200203000-00008
[21] Elstad J, I, Vabø, M., Job stress, sickness absence and sickness presenteeism in Nordic elderly care, Scandinavian Journal of Public Health, 2008, 36(5), P.467–74. doi.10.1177.1403494808089557
[22] Elovainio M, Heponiemi T, Kuusio H, Jokela M, Aalto A-M, Pekkarinen L, et al. Job demands and job strain as risk factors for employee wellbeing in elderly care: an instrumental-variables analysis, European journal of public health, 2015, 25(1), P.103–8. Doi:10.1093.eurpub.cku115
[23] Khalifeh Sultani, S, A., Barari, S., Antecedents and Consequences of Auditor’s Role Stress, Quarterly financial accounting journal, 2016, 7(28), P. 32-55. (In Persian)
[24] Khatoni M, Mlahasani M, Khoeniha S., Job stress and its related factors in accountant employees of Qazvin University of Medical Sciences, Iran Occupational Health Journal, 2011, 8(2), P. 1-18. (In Persian).
[25] Lopez, D. M., Peters, G. F., The effect of workload compression on audit quality, Auditing: A Journal of Practice & Theory, 2012, 31(4), P. 139–165. Doi:10.2308.ajpt-10305
[26] Karasek, R. A., Job demands, job decision latitude, and mental strain: implications for job redesign, Administrative Science Quarterly, 1979, 24(2), P. 285–307. Doi: 10.2307.2392498
[27] Yan, H., Xie, Sh., How does auditors’ work stress affect audit quality? Empirical evidence from the Chinese stock market, China Journal of Accounting Research, 2017, 9(12), P. 305–319. Doi:10.1016.j.cjar.2016.09.001
[28] Landsbergis, P. L., Occupational stress among health care workers: a test of the job demand-control model. J. Org. Behav, 1988, 9(3), P. 217–239. Doi:10.1002.job.4030090303
[29] Fletcher, B. C., Jones, F., A refutation of Karasek’s demand-discretion model of occupational stress with a range of dependent measures, Journal of Organizational Behavior, 1993, 14(4), P. 319–330. Doi:10.1002.jo b.4030140404
[30] Dwyer, D. J., Ganster, D. W., The effects of job demand and control on employee attendance and satisfaction. Journal of Organizational Behavior, 1991, 12(7), P. 595–608. Doi:10.1002.job.4030120704
[31] Hackenbrack, K., Jensen, K. L., and Payne, J. L., The effect of a bidding restriction on the audit services market, Journal of Accounting Research, 2000, 38(2), P. 355–374. Doi: 10.2307.2672937
[32] Jeter, D. C., Shaw, P, E. Solicitation and auditor reporting decisions, The Accounting Review, 1995, 70(2), P. 293–315.
[33] Kallapur, S., Sankaraguruswamy, S., and Zang, Y., Audit Market Concentration and Audit Quality. Working paper, Indian School of Business, National University of Singapore, and Singapore Management University, 2010.
[34] Francis, J. R., and Wang, D., The joint effect of investor protection and Big 4 audits on earnings quality around the world, Contemporary Accounting Research, 2008, 25(1), P. 157–191. Doi:10.1506.car.25.1.6
[35] Leventis, S., Weetman, P., Caramanis, C., Determinants of audit report lag: Some evidence from the Athens Stock Exchange, International Journal of Auditing, 2005, 9(1), P. 45-58. Doi:10.1111.j.1099-1123.2005.00101.x
[36] Al-Ghanem, W., Hegazy, M., An empirical analysis of audit delays and timeliness of corporate financial reporting in Kuwait, Eurasian Business Review, 2011, 11(1), P. 73-90. Doi:10.14208.BF03353799
[37] Rahmani, H., Bekhradi Nasab, V., Effect of Normal and Abnormal Delays in the Process of Publishing and Presenting the Auditor's Report on Auditor's Independence, Audit Knowledge Quarterly, 2017, 67(17), P. 265-286. (In Persian)
[38] Xu, C., Work stress system: mechanism, handling and management. Journal Zhejiang Normal Univ.: Social Sci, 1999, 5(2), P. 69–73. Doi:10.1016.j.anucene.1999.01.040
[39] Aliakbarpoor, Z., Izadikhah, M., Evaluation and ranking DMUs in the presence of both undesirable and ordinal factors in data envelopment analysis, International Journal of Automation and Computing, 2012, 9 (6), P. 609-615, Doi:10.1007/s11633-012-0686-5
[40] Willett, C., Page, M., A survey of time budget pressure and irregular auditing practices among newly qualified UK chartered accountants, British Accounting Review, 1996, 28(2), P. 101–120, Doi:10.1006.bare.1996. 0009
[41] Ghebremichael, A, A., Determinants of behavioural intentions in the audit market, International Journal of Quality and Service Sciences, 2019, 11(1): 87-103, Doi:10.1108.IJQSS-10-2017-0091
[42] Amiruddin, A., Mediating effect of work stress on the influence of time pressure, work-family conflict and role ambiguity on audit quality reduction behaviour, International Journal of Law and Management, 2019, 61(5), P.1-17. Doi:10.1108.IJLMA-09-2017-0223
[43] Duh, R.R., Chunlai, Ye., Yu, L.H., Corruption and audit market concentration: an international invetigtion, Asia-Pacific Journal of Accounting & Economics, 2018, 23, P.23-45.Doi:10.1080.16081625.2018.1540942
[44] Velte, P., Stiglbauer, M. Audit Market Concentration and Its Influence on Audit Quality, International Business Research, 2018, 5(1), P.146-161. Doi:10.5539.ibr.v5n11p146
[45] Huang, T. C., Chang, H., Chiou, J, R., Audit Market Concentration, Audit Fee, and Audit Quality: Evidence from China, Auditing: A Journal of Practice and Theory, 2012, 35(2), P.121- 145. Doi:10.2308.ajpt-51299
[46] Climent-Serrano, S., Bustos-Contell, E., Labatut-Serer, G., Rey-Martí, A., Low-cost trends in audit fees and their impact on service quality, Journal of Business Research, 2018, 21(4), P. 12-30. Doi:10.1016.j.jbusres.2017 .11.020
[47] Agoglia, C. P., Brazel, J. F., Hatfield, R. C., Jackson, S. B., How do audit workpaper reviewers cope with the conflicting pressures ofdetecting misstatements and balancing client workloads? Auditing: J. Practice Theory, 2010, 29(2), P. 27–43. Doi:10.2308.aud.2010.29.2.27
[48] Sundgren, S., Svanstrom, T., Auditor-in-charge characteristics and going-concern reporting, Contemporary Accounting Research, 2014, 31(2), P. 531–550. Doi:10.1111.1911-3846.12035
[49] Kordestani, G., Rezazadeh, J., Kazemi Olum, M., Abdi, M., The Investigation of Audit Market Concentration Impact on Audit Fees and Audit Quality, Journal of Financial Accounting Research, 2018, 10(2), P. 65-84. (In Persian) Doi:10.22108.far.2018.110488.1251
[50] Zalaghi, H., Godini, M., Mansouri, K., The Moderating Role of Firms characteristics on the Relationship between Working Capital Management and Financial Performance. Advances in Mathematical Finance and Applications, 2019, 4(1), P. 71-88. Doi: 10.22034.amfa.2019.581878.1158