Audit report lag: The role of auditor type and increased competition in the audit market

Fakhroddin Mohammadrezaei, Norman Mohd Saleh

Research output: Contribution to journalArticle

6 Citations (Scopus)

Abstract

This study investigates the effect of auditor type (private vs. state) and increased competition in an audit market on audit report lag (ARL). This is the first study to provide evidence regarding the effect of audit market competition on ARL. Utilising structure-conduct-performance theory, we predict that competition pressures private auditors to be more efficient and to have less reporting lag than state auditors. We also predict that competition among auditors after a liberalisation period forces auditors to be more efficient and to record less ARL than before. We use a unique data set in Iran, whereby the audit market liberalisation (an audit market where services were previously provided primarily by a state entity) has resulted in both state and private auditors simultaneously providing audit services. The findings are consistent with the following hypothesis, that is ARL is shorter for private auditors than it is for state auditors, and ARL decreases as competition increases in the Iranian audit market. Consistent with the structure-conduct-performance theory, the findings suggest that increased competition in the audit market results in higher efficiency, as reflected by a shorter ARL.

Original languageEnglish
JournalAccounting and Finance
DOIs
Publication statusAccepted/In press - 2016

Fingerprint

Auditors
Lag
Audit reports
Audit market
Audit
Market liberalization
Iran
Market competition
Liberalization

Keywords

  • Audit efficiency
  • Audit market liberalisation
  • Audit report lag
  • Increased competition
  • Iran
  • Private and state auditors

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics, Econometrics and Finance (miscellaneous)

Cite this

Audit report lag : The role of auditor type and increased competition in the audit market. / Mohammadrezaei, Fakhroddin; Mohd Saleh, Norman.

In: Accounting and Finance, 2016.

Research output: Contribution to journalArticle

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