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Islamic Religious Atmosphere and Audit Pricing: Evidence from Iran

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  • Mehdi Khodakarami
  • Zabihollah Rezaee
  • Reza Hesarzadeh

Abstract

This study examines whether the Islamic religious atmosphere of local communities influences audit pricing. We use a comprehensive survey conducted by Iran's Ministry of Culture and Islamic Guidance to measure the Islamic religious atmosphere. Using a sample of 1,204 observations from firms listed in Iran's capital market, we find that firms located in regions with a strong Islamic religious atmosphere pay significantly lower audit fees. Furthermore, the study reveals that family ownership (auditor size) strengthens (weakens) the aforementioned relationship. However, we did not find a significant moderating role for the local community's social capital. We contribute to the ethics literature by providing a better understanding of the economic consequences of the religious atmosphere and offering policy, practical, and educational implications.

Suggested Citation

  • Mehdi Khodakarami & Zabihollah Rezaee & Reza Hesarzadeh, 2021. "Islamic Religious Atmosphere and Audit Pricing: Evidence from Iran," Business Ethics, the Environment & Responsibility, John Wiley & Sons, Ltd., vol. 30(4), pages 716-737, October.
    • Handle: RePEc:wly:buseth:v:30:y:2021:i:4:p:716-737
    DOI: 10.1111/beer.12364
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