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Investigating the relationship between institutional investors' attention deviation and audit risk
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Ali Vaez   , Babak Abedi Sadaghiani * , Amir Hossein Montazer Hojat , Ali Ghannad |
| Shahid Chamran University of Ahvaz |
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Abstract: (482 Views) |
Institutional investors are considered to be one of the main pillars of corporate governance, and the monitoring of managers is done more favorably with their presence. Sometimes, institutional investors temporarily focus their attention on some parts of their investment portfolio, and this causes that at the same time, the monitoring activities on some other companies are reduced. The issue is referred to as the deviation of the attention of institutional investors. In the current research, it has been discussed that when the attention of institutional investors is diverted from a company, whether this issue is taken into account from the point of view of independent auditors in the assessment of audit risk or not. For this purpose, 850 company-year observations (85 companies admitted to the Tehran Stock Exchange) have been collected during the years 2012 to 2021. In order to analyze the data, the panel data regression model and EViews 10 software were used. For this purpose, by using a suitable criterion to measure the deviation of the attention of institutional investors, its relationship with the audit fee and the delay of the auditor's report was investigated. The results of the research showed that the audit fee and the audit lag increase in periods when institutional investors temporarily focus their attention on other parts of their portfolio. Therefore, it can be said that the monitoring activities of institutional shareholders have led to the reduction of audit risk and this is in the interest of auditors. This paper also shows that the negative effect of investors’ limited attention on corporate monitoring can be somewhat mitigated by auditors.
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| Keywords: Deviation of attention of institutional investor, Audit risk, Audit fee, Audit lag. |
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Full-Text [PDF 481 kb]
(116 Downloads)
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Type of Study: Research |
Subject:
Auditing
Received: 2023/03/15 | Accepted: 2023/05/30 | Published: 2024/03/10
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