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The relationship between managerial ability, earnings management and internal control quality on audit fees in Iran

Author

Listed:
  • Mahdi Salehi
  • Mahmoud Mousavi Shiri
  • Seyedeh Zahra Hossini

Abstract

Purpose - The purpose of this paper is to emphasize the relationship between managerial ability, earnings management, internal control quality and audit fees to establish whether or not there is a significant relationship between the variables of managerial ability, earnings management, internal control quality and the audit fees. Design/methodology/approach - The study sample includes 190 listed companies on the Tehran Stock Exchange during 2009–2016. Research hypotheses were tested using the statistical methods of multivariable linear regression and data envelopment analysis pattern. Findings - The obtained results indicate that there is a significant and direct relationship between managerial ability and internal control quality as well as real earnings management and internal control quality. Based on the results obtained from the second hypothesis, the authors could claim that there is an inverse and significant relationship managerial ability and audit fees. The third hypothesis also revealed that in companies with lower audit fees, there is a stronger relationship between managerial ability and internal control quality. The results of related tests show no significant relationship between accrual-based earnings management and internal control quality. Originality/value - This paper is the first study in Iran whose main focus is on the relationship between managerial ability, earnings management, internal control quality and audit fees.

Suggested Citation

  • Mahdi Salehi & Mahmoud Mousavi Shiri & Seyedeh Zahra Hossini, 2019. "The relationship between managerial ability, earnings management and internal control quality on audit fees in Iran," International Journal of Productivity and Performance Management, Emerald Group Publishing Limited, vol. 69(4), pages 685-703, July.
    • Handle: RePEc:eme:ijppmp:ijppm-07-2018-0261
    DOI: 10.1108/IJPPM-07-2018-0261
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    Citations

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    Cited by:

    1. Tong Sheng & Bingquan Fang & Xiaoqian Lu & Xingheng Shi & Chaohai Shen & Xiaolan Zhou, 2022. "The Relationship between Corporate Social Responsibility, Global Investment, and Equity Incentives," Sustainability, MDPI, vol. 14(23), pages 1-27, December.
    2. Puspita Ghaniy Anggraini & Mahfud Sholihin, 2023. "What do we know about managerial ability? A systematic literature review," Management Review Quarterly, Springer, vol. 73(1), pages 1-30, February.

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