The Effect of Financial Reporting Tone on Audit Fees of Listed Companies in Tehran Stock Exchange

Bozorg Asl, Mosa; Marfo, Mohamad; Mahannejad, Mahdi

doi:10.22054/qjma.2021.57363.2211

The Effect of Financial Reporting Tone on Audit Fees of Listed Companies in Tehran Stock Exchange

Document Type : Research Paper

Authors

Mosa Bozorg Asl ¹

mohamad marfo ²

mahdi mahannejad ³

¹ Associate Professor of Accounting, Allameh Tabatab'i University, Tehran, Iran

² Assistant Professor of Accounting, Allameh Tabataba'i University, Tehran, Iran

³ Ph.D candidate , of Accounting, Allameh Tabatab'i University, Tehran, Iran

https://doi.org/10.22054/qjma.2021.57363.2211

Abstract

Linguistic features of information provided by business unit management could facilitate the goals of the transmission of economic facts. In recent years, these characteristics have always been considered in research in the field of accounting and behavioral finance. Therefore, this study seeks to examine the effect of financial reporting tone on audit fees. The sample consists of 63 companies listed in Tehran Stock Exchange for the period from 2012 to 2019. Financial reporting tone is measured using the model introduced by Muhammad et al (2019). Also, a natural logarithm is used to measure audit fees. The data are analyzed and the hypotheses are tested based on the multivariate regression model and panel data. The findings show that financial reporting tone has a significant negative effect on audit fees. In other words, if the financial reporting tone conveys an optimistic tone, the audit fee will be less. Results indicate that financial reporting tone reflects factors that auditors consider in assessing audit risk.

Keywords

Audit fees

Audit pricing

Audit risk

Financial reporting tone

Textual analysis

Subjects

Financial Accounting

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