|
Discovered audit distortions and managers' reporting tone: the mediating role of financial reporting quality
|
Azam Pouryousof   , Farzaneh Nassirzadeh , Mahdi Saghafi * |
| Payame Noor University |
|
|
Abstract: (490 Views) |
Representation and accreditation theories have provided a logical description of the need of companies to use the services of auditors. Although auditors play an important role in monitoring the quality of financial reports, it is possible that managers seek to control the perceptions of information users in order to hide the poor results obtained by changing the tone of explanatory reports. . Therefore, the purpose of the current research is to investigate the mediating role of financial reporting quality in the relationship between the discovery of audit distortions and the tone of managers' annual explanatory reports in the Iranian capital market environment. In this research, the data of 118 companies admitted to the Iran Stock Exchange during a period of 8 years (2014 to 2022) were used using panel data to test the hypotheses. Hypotheses have also been tested using linear regression models and the Sobel test. The results indicate that with the increased effort of auditors to discover important distortions of financial statements, the level of discretionary accruals has decreased, which increases the quality of financial reports. Also, with the decrease in the quality of financial reporting, managers try to use more positive words in the annual explanatory reports. In this way, the quality of financial reporting can play a mediating role on the relationship between audit quality and the tone of explanatory reports.
|
|
| Keywords: Audit quality, financial reporting tone, agency theory, reporting quality. |
|
|
Full-Text [PDF 462 kb]
(129 Downloads)
|
Type of Study: Research |
Subject:
Auditing
Received: 2023/05/19 | Accepted: 2023/07/9 | Published: 2024/03/10
|
|
|
|
|
|
|
| Send email to the article author |
|
|
|
| Add your comments about this article |
|
|
|
