Article2020

Audit adjustments and corporate financing: evidence from Iran

Mahdi Moradi · Mahdi Salehi · Hossein Tarighi · Mahdi Saravani

23 citations0/0 files storedJournal of Accounting in Emerging Economies

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Auditing, Earnings Management, Governance Corporate Finance and Governance Corporate Governance and Financial Management

Abstract

Purpose Independent auditors play an important role in increasing the reliability of financial information by giving their professional opinion on the financial statements of business units. Therefore, the purpose of this study is to investigate the relationship between the audit adjustments and financing of companies. Design/methodology/approach The sample of the study includes 173 Iranian companies listed on the Tehran Stock Exchange (TSE) between 2010 and 2017. Findings There is no significant association between the profit incremental audit adjustments (Disagreement) and financing of companies in the current year and the following year through a loan. Furthermore, there is no meaningful relationship between the earnings downward/upward audit adjustments (Disagreement) and the financing of companies in the current year and the following year through ordinary stocks. However, there is a meaningful relationship between the profit downward audit adjustments (Disagreement) and the financing of firms in the current year through a loan. In general, as Iran's economy is facing severe economic sanctions, the existence of a high inflation rate has led to a steady increase in the stock prices of Iranian companies; hence, investors regardless of audit reports prefer to invest their money in the stock market so that it does not lose its purchasing power. Under these disaster economic circumstances, creditors are less willing to lend to companies with lower profits. Originality/value The results of the current study extend the knowledge of previous studies as financial pressures from economic sanctions have both positive and negative psychological effects on corporate financing.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 23 citations exist upstream.

References

2010Understanding earnings quality: A review of the proxies, their determinants and their consequences 1968The Information Content of Annual Earnings Announcements 2004Earnings quality in UK private firms: comparative loss recognition timeliness 1999Testing static tradeoff against pecking order models of capital structure1This paper has benefited from comments by seminar participants at Boston College, Boston Unsiversity, Dartmouth College, Massachusetts Institute of Technology, University of Massachusetts, Ohio State University, University of California at Los Angeles and the NBER, especially Eugene Fama and Robert Gertner. The usual disclaimers apply. Funding from MIT and the Tuck School at Dartmouth College is gratefuly acknowledged. We also thank two reviewers, Richard S. Ruback and Clifford W. Smith, Jr., for helpful comments.1 2016The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research 2002Operating Performance and the Method of Payment in Takeovers 2015The information role of audit opinions in debt contracting 2017Audit quality, debt financing, and earnings management: Evidence from Jordan

Cited by

2022The Effect of Mandatory Audit Firm Rotation on Earnings Management and Audit Fees: Evidence from Iran

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.