Abnormal Delay in Giving the Audit Report and the Risk of Subsequent Drop in Stock Price

Subject Areas : Ethics and accounting

Midya Azizi ¹ (Master's degree, Department of Accounting, Firuzkoh Branch, Islamic Azad University, Firozkoh, Iran)
Ali Akbar Vakili ² (Master's degree, Department of Accounting, Faculty of Humanities, Tehran East Branch, Islamic Azad University, Tehran, Iran)
Ali Nazari Abarkouh ³ (Master's degree, Department of Accounting, Faculty of Humanities, Shahr Ray Branch, Islamic Azad University, Tehran, Iran)

Received: 2022-03-17 Accepted : 2022-06-27 Published : 2022-03-21

Keywords: Accounting, Audit Report, Risk of Drop in Stock Price, Tehran Stock Exchange,

Abstract :

The purpose of the present study is to review the relationship between abnormal delay in giving the audit reports and the risk of subsequent drop in stock price. The research is descriptive and it has been conducted by the correlation method. In terms of purpose, it is applied research and from the aspect of data collection, it is Ex-Post Facto which uses the available data base of Tehran Stock Exchange. The research statistical population includes all accepted corporations in Tehran Stock Exchange and for choosing a sample, 137 corporations were selected by systematic removal method during the years from 2012 to 2019. Then, the data was collected and analyzed by multivariate regression. For measuring the variable risk of drop in stock price, three indices of negative skewness of stock output, low to high fluctuation, and maximum sigma were used. Besides, two indices of the highest delay decile in giving the audit report (here more than 110 days) and the rest of the regression model of effective causes on the distance between the ending date of the financial period and the audit report date of abnormal delay were used. The research results reveal that there is a significant correlation between abnormal delay in giving audit reports and the risk of subsequent drop in stock price.

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