PurposeThis study aims to examine the Taiwan setting, where audit partners’ names are presented in the audit report and where audit committee formation is voluntary in the initial stage of audit committee reform. This paper investigates the effects of the formation of voluntary audit committees on the selection of individual audit partners, and, in turn, the audit quality. This contrasts with previous studies investigating the relationship between audit committees and auditor selection at the audit firm level.Design/methodology/approachThis paper samples all of Taiwan’s publicly listed firms for the period 2007–2012 and uses Heckman’s (1979) two-stage estimation model to achieve our objectives.FindingsUsing different characteristics of individual engagement partners as proxies for a higher quality auditor, the main empirical results show that voluntary audit committee formation is positively related to an industry specialist lead partner and a lead partner that has a larger number of clients. In addition, this paper also finds that voluntary audit committee formation has a positive impact on audit quality (proxied by discretionary accruals). The results suggest that the voluntary formation of an audit committee contributes positively to both auditor selection and audit quality. Furthermore, an additional test shows that the main empirical results are robust to a validity threat that firms that have good corporate governance prior to the formation of voluntary audit committees tend to select high-quality audit partners.Originality/valueThe paper contributes to the audit committee literature in the following ways: this paper takes advantage of Taiwan’s unique setting, where forming an audit committee is not compulsory in the initial stage of audit committee reform, to investigate the voluntary audit committee, auditor selection and audit quality; this paper expands on Abbott and Parker’s (2000) study of audit committee characteristics and auditor selection at the audit firm level by examining this relationship at the individual audit partner level; this paper responds to the call by Church et al. (2008) and DeFond and Francis (2005) who propose more studies on audit quality at the individual engagement partner level.

PurposeThe purpose of this study is to understand how the new reforms related to key audit matters (KAM) disclosures in Australia may have impacted audit quality by eliciting the perceptions of key stakeholders in the audit and assurance services market.Design/methodology/approachThe study uses a qualitative approach and New Institutional Sociology (NIS) to explain how auditors have responded to the KAM reforms. Interviews were conducted with 20 individuals representing identified groups of stakeholders in the market for audit and assurance services in Australia.FindingsThe study finds there is little consensus between some stakeholder groups on whether the KAM reforms may have improved audit quality, based on the perceptions shared. The findings conveyed that the auditors and regulators, standard setters acknowledge that KAM disclosures are either costly and/or time-consuming to implement. The Big Four auditors indicate these reforms led to changes mainly around internal consultations and independent reviews, whereas the non-Big Four auditors highlighted increased interactions with audit clients.Originality/valueThis is one of the first studies to examine the perceived post-implementation impacts on audit quality of the KAM reforms (ISA 701) after the initial two years of implementation and how auditors have responded, explored through the lens of institutional logic.

PurposeThis study examines the association between Chief Executive Officer (CEO) power and the level of corporate social responsibility (CSR) disclosure, as well as the moderating role of stakeholder influence on this association.Design/methodology/approachUsing a sample of 986 Bangladeshi firm-year observations, this study uses a content analysis technique to develop a 24-item CSR disclosure index. The ordinary least squares regression method is used to estimate the research models, controlling for firm-specific factors that potentially affect the levels of CSR disclosure.FindingsThe study findings indicate that CEO power is negatively associated with the level of CSR disclosure, and that the negative effects of CEO power on the level of CSR disclosure are attenuated by stakeholder influence. CEO power is documented as reducing the positive impact of CSR disclosure on a firm’s financial performance, with this negative impact attenuated if stakeholders have greater influence on the firm.Practical implicationsThis study suggests that CEO power and stakeholder influence are important factors in determining firms’ incentives to disclose CSR information. Both CEO power and stakeholder influence need to be considered in the CSR – firm performance nexus, given the mixed findings documented in the literature.Originality/valueThis study makes a significant contribution to the literature on CSR practices by documenting that firms with a powerful CEO have lower levels of CSR disclosure, and that stakeholder influence affects CSR disclosure in the emerging economy context.

PurposeThe purpose of this study is to examine the impact of chief executive officer (CEO) personal characteristics on the performance of Indian commercial banks. Additionally, it also analyses the nonlinear relationship of CEO age and CEO tenure on the bank performance.Design/methodology/approachA balanced panel data approach has been used in this study. Particularly, the fixed effect estimation technique is used to examine the relationship between CEO characteristics and bank performance during the period 2009–2010 to 2016–2017.FindingsThe authors find that professional qualification of CEOs in finance stream enhances performance. Additionally, the impact of CEO duality is found to be positive and significant on performance. Male CEOs are beneficial for bank performance. Well experienced CEOs contribute to higher performance. The results are robust across the various proxies of bank performance, and sub-samples based on ownership, size of the bank and board size.Practical implicationsThis study provides insights to policy regulators and policymakers who are entrusted with the appointment of the CEOs in the banks in the light of the ongoing regulatory reforms.Originality/valueThis study can be considered as one of the early studies, which examines the association between CEO characteristics and bank performance from an emerging economy perspective. It also extends the existing study by considering both public and private banks operating in India.

Purpose This paper aims to examine the effect of religiosity on the degree of auditor independence given the significance of symbolic gestures constructed by client economic conditions in different situations before and after considering the degree of auditors’ moral development. Design/methodology/approach The paper uses an experimental design based on running mixed factorial analysis of variance (SPANOVA) using mainly repeated measures GLM to test the interaction effects between (and within) variables on auditor independence. Findings The main findings indicate that there is a significant interactional effect between the degree of moral development and intrinsic religiosity on the degree of auditor independence, given the stimulating effect of the client’s economic gestures/conditions. Practical implications The Egyptian economy is growing and ensuring that auditor independence is paramount to sustaining the local, as well as foreign investors’ interest. Hence, this study is very important in highlighting factors that might lead to some impairment of auditors’ independence. Originality/value To the best of the authors’ knowledge, this study is the first to test the interactional effect between the religious orientation rather than religious affiliation and moral development on the degree of auditor independence, such a relationship has not been tested before in the literature. Additionally and most importantly, it uses statistical measurement through its experimental design, as there is a lack of studies in terms of auditor independence in Egypt. The existing literature follows the perceptional assessment rather than the real measurement of the degree of auditor independence.

PurposeThe purpose of this study is to examine whether the presence of an audit committee (AC) members with Chief Executive Officer (CEO) experience (supervisory experts) affects the market value of cash holdings.Design/methodology/approachTo estimate the marginal value of cash holdings, this study uses the model proposed by Faulkender and Wang (2006). The sample is 2,031 firm-year observations in Korea from 2000 through 2015.FindingsThe authors find that the presence of supervisory experts on ACs has a negative impact on the value of cash holdings. This result suggests that supervisory experts on ACs weaken monitoring of managerial actions. The authors also find that the negative effect of supervisory experts on the value of cash holdings is mitigated when there are other AC members with accounting expertise.Practical implicationsThe findings that AC supervisory expertise impairs the effectiveness of ACs, and thus destroys shareholder value have policy implications because the current regulations in many countries use a broad definition of financial expertise that includes supervisory expertise.Originality/valueThis is the first study that directly examines the effect of AC supervisory expertise on the value of cash holdings. The study also contributes to the literature on the role of ACs in emerging markets by documenting the limitations of corporate governance systems adopted from the Anglo–Saxon model.

PurposeThis paper reviews and synthesizes the extensive literature that investigates turnover in public accounting firms.Design/methodology/approachThis paper initially identifies turnover studies by searching two commonly used business databases, ABI and Business Source. Subsequently, references in these studies are examined. Over 100 published studies of accounting firms are identified.FindingsPrior turnover studies can be classified by the underlying theory: psychological attachment; role theory; mentoring; and organizational justice. Using these theories, prior research has examined a wide variety of issues such as the role of gender in turnover.Practical implicationsTurnover is a significant and long-term problem in accounting firms. Practitioners and researchers have long noted that firms lose the costs of training employees who leave the firm. Recently, many in the auditing field have recognized that employee turnover may reduce audit quality. This paper summarizes prior turnover research, which may provide guidance to future researchers and managers of accounting firms.Originality/valueThis study fills a void in the accounting literature, which is missing a comprehensive and up to date review of prior studies of turnover in accounting firms. Opportunities for future research are also explored. While much has been learned, some theoretical and methodological issues remain unresolved.

PurposeThis paper aims to evaluate policymakers’ concerns about the lack of competition in highly concentrated markets for public company audits by examining the association between audit fees and the inequality of Big 4 market shares at both the USA national-industry and city-industry levels.Design/methodology/approachUsing publicly available data, this paper uses regression analysis to examine publicly available data to test research hypotheses related to the association between audit market inequalities and audit fees at both the USA national-industry and city-industry levels.FindingsThe findings support a U-shaped association between national-industry inequality and audit fees. As inequality initially increases, fees decrease; however, as inequality becomes increasingly large fees increase. The city-industry level analysis shows the opposite pattern. The results are consistent with capacity constraints at the national-industry level that are less binding at the city-industry level.Research limitations/implicationsThis study provides evidence that market inequality has a non-linear association with audit price and contributes to the limited findings in industrial organization research on the importance of market share inequality in highly concentrated markets.Originality/valueThis study provides new insights into the growing body of research on audit market structure by documenting that national-industry and city-industry analysis provides different insights into the market structure. In addition, the sample period for this study (2004-2017) addresses the General Accounting Office (GAO) concern about the lack of a stable audit market in the period it examined (GAO, 2008, p. 94) and finds evidence of market structure effects not present in the earlier GAO studies (GAO, 2003, 2008).

Purpose This paper aims to examine major cognitive biases in auditors’ analyses involving visualization, as well as proposes practical approaches to address such biases in data visualization. Design/methodology/approach Using the professional judgment framework of KPMG (2011), this study performs an analysis of whether and how five major types of cognitive biases (framing, availability, overconfidence, anchoring and confirmation) may occur in an auditor’s data visualization and how such biases potentially compromise audit quality. Findings The analysis suggests that data visualization can trigger and/or aggravate the common cognitive biases in audit. If not properly addressed, such biases may adversely affect auditors' judgment and decision-making. Practical implications To ensure that data visualization improves audit efficiency and effectiveness, it is essential that auditors are aware of and successfully address cognitive biases in data visualization. Six practical approaches to debias cognitive biases in auditors’ visualization are proposed: using data visualization to complement rather than supplement traditional audit evidence; positioning data visualization to support rather than replace sophisticated analytics tools; using a dashboard with multiple dimensions; using both visualized and tabular data in analyses; assigning experienced audit staff; and providing pre-audit tutorials on cognitive bias and visualization. Originality/value The study raises awareness of psychological issues in an audit setting.