Abstract:
The findings of theoretical investigations indicate that short-term auditor tenures may contribute to further audit report lags (ARLs). On the other hand, auditor industry expertise represents one of the determinant factors contributing to audit quality, which has been widely studied in numerous researches. Indeed, the better the quality of audit, the less delayed would be the audit report. As such, aiming at investigating the association between auditor tenure and ARL on the one hand, and studying the adjusting effect of auditor industry expertise on the other hand, the present research investigated 141 firms operating within 25 industries during 2010-2014. Chaw and Hausman Test results indicated, at 5% level of significance, that the corresponding regression model should be assessed with consistent effects. Furthermore, undertaking multivariate linear regression analysis, the research results implied no significance association between auditor tenure and ARL. In fact, the first hypothesis that auditor tenure is negatively related to ARL was rejected. On the other hand, the second hypothesis that auditor industry expertise may attenuate the association of auditor tenure and ARL was also rejected, meaning that, even with auditor industry expertise considered, a significant relationship between auditor tenure and audit report lag could not be recognized.
Machine summary:
"Faculty of Management and Accounting, Allame Tabatabaie University, Tehran, Iran (Received: February 7, 2017; Revised: August 21, 2017; Accepted: September 16, 2017) Abstract The findings of theoretical investigations indicate that short-term auditor tenures may contribute to further audit report lags (ARLs).
In a paper entitled as "Auditor Tenure, Auditor Industry Expertise, and Audit Report lag", Dao and Pham (2014) used 7291 firm-year observations during 2008-2010 to investigate the relationship between auditor tenure and ARL along with the effect of auditor industry expertise on this relationship.
Following the approach used by, Habib and Bhaiyan (2011) and Dao and Pham (2014), we used the following regression model moderated based on Iran situations to test the relationship between auditor tenure and ARL, and also the adjusting effect of industry expertise, as a variable, on this relationship: (1) where: ARL, referring to the number of calendar days from fiscal year end till the audit reporting date, it is taken as the dependent variable in this research.
Furthermore, audit operations undertaken by audit organization are supposed to be associated with reduced ARLs. Results and Discussion Aiming at investigating the relation between audit tenure and ARL along with the effect that measured audit quality may pose on this relation via auditor industry expertise, the present research considers possible effective factors on ARL.
Discussion and Conclusion Aiming at investigating the association between auditor tenure and audit report lag, and studying the adjusting effect of auditor industry expertise as well, the present research studied observations from 141 firms operating within 25 industries during 2010-2014."