IDEAS home Printed from https://ideas.repec.org/a/eme/arapps/ara-03-2019-0066.html
   My bibliography  Save this article

Auditors’ response to readability of financial statement notes

Author

Listed:
  • Mahdi Salehi
  • Mahmoud Lari Dasht Bayaz
  • Shaban Mohammadi
  • Mohammad Seddigh Adibian
  • Seyed Hamed Fahimifard

Abstract

Purpose - The main objective of the present study is to assess the potential impact of readability of financial statement notes on the auditor's report lag, audit fees and going concern opinion (GCO). Design/methodology/approach - The statistical population of this study includes all listed firms on the Tehran Stock Exchange (TSE) for the period of 2012–2017. The systematic elimination method is used for sampling and multiple regression and EViews software are used for testing the hypothesis models. Findings - The obtained results show that there is a significant and positive relationship between audit report lags and readability of financial statements. Moreover, it is also revealed that readability of financial statements is positively associated with audit fees. Furthermore, the findings suggest a negative correlation between readability indexes and issuing GCOs, denoting hard-to-read statements is considered as a risk factor by auditors. Finally, the observations of our robustness tests suggest that the association between audit report lag and readability of financial statements is robust. Originality/value - This is the first conducted investigation concerning auditor's response to the readability of financial statement notes in TSE. The outcome of current paper may pave the way for revising and developing Iranian accounting standards in order to give a fairer and clearer picture of financial reports.

Suggested Citation

  • Mahdi Salehi & Mahmoud Lari Dasht Bayaz & Shaban Mohammadi & Mohammad Seddigh Adibian & Seyed Hamed Fahimifard, 2020. "Auditors’ response to readability of financial statement notes," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 28(3), pages 463-480, June.
    • Handle: RePEc:eme:arapps:ara-03-2019-0066
    DOI: 10.1108/ARA-03-2019-0066
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/ARA-03-2019-0066/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/ARA-03-2019-0066/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/ARA-03-2019-0066?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wei Qian & Yuemeng Ge, 2021. "The implementation of leisure tourism enterprise management system based on deep learning," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 12(4), pages 801-812, August.
    2. Orman Hamedi Ilkhechi & Saeid Anvar Khatibi, 2020. "The Impact of Earnings Persistence on the Operating Cash Flows with Emphasis on Financial Constraints," International Journal of Business and Administrative Studies, Professor Dr. Bahaudin G. Mujtaba, vol. 6(5), pages 265-274.
    3. Aditya Aji Prabhawa & Iman Harymawan, 2022. "Readability of Financial Footnotes, Audit Fees, and Risk Management Committee," Risks, MDPI, vol. 10(9), pages 1-21, August.
    4. Imen Fakhfakh & Anis Jarboui, 2022. "Earnings Management and Audit Report Lag: The Role of Audit Risk-Tunisian Evidence," Journal of Accounting and Management Information Systems, Faculty of Accounting and Management Information Systems, The Bucharest University of Economic Studies, vol. 21(1), pages 113-135, March.
    5. Shaimaa Abdulazeez Sahib & Asaad Mohammed Ali Wahhab, 2023. "The Experience of the Internal Auditor in Reducing the Penetration of Computerized Data and its Effect on the Bank Continuity: Evidence from the Emerging Markets," Technium Social Sciences Journal, Technium Science, vol. 45(1), pages 106-126, July.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:arapps:ara-03-2019-0066. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.