Do auditors perform governance functions？ A research on the change of performance notice

Whether auditors provide high-quality audit services has been a concern of academics for a long time, but it has not clear answer. In this paper the author studies this problem from the real basis of audit activities, in view of an endless stream of the performance of listed companies notice ＂change＂ phenomenon. The author finds that auditing is the important reasons of listed companies notice ＂change＂, auditor can improve disclosure quality, is the gatekeeper to accounting information. The author also finds that there may be exist collusion of listed company with auditor, SEC should enhance inspection of the implementation of listed companies notice of earnings.     

Audit Committee Attributes on Audit Fees： The Impact of Malaysian Code of Corporate Governance （MCCG） 2007

The evolution of corporate governance has created a competitive environment among the companies to catch the attention of investor＇s confidence. This paper aims to examine the relationship between the audit committee attributes and the audit fees. Specifically, this paper aims to examine the effects of audit committee expertise （number of financial-related director＇s trainings and experience） on audit fees. The data are obtained from annual reports of the population of Bursa Malaysia listed companies for both Main and Ace markets in year 2008. The results show that audit committee size is significant and has a positive association with audit fees. However, audit committee＇s financial related training is significant and has a negative association with audit fees. These results suggest that financial training of audit committee could have an impact on the lower audit fees. However, audit committee expertise is significant and has a positive association with audit fees. This suggests that financial-related training is needed in order to enhance the expertise of audit committee members.     

The effect of earnings forecast precision on firm value and insider trading under voluntary disclosure in Taiwan

Taiwan changed its earnings forecast policy from mandatory to voluntary disclosure in 2005. In this study, the inferences of voluntary earnings forecast are examined based on forecasts issued by listed firms. This study suspects that insiders have a temptation to strategically manipulate financial forecast information to influence markets and thus receive extra rents. Under the new earnings forecast disclosure policy, the number of disclosing firm decreases but the precision of earnings forecast increases. The empirical result from dynamic panel data evidences the forecast error of voluntary disclosure may negatively impact firm values. Furthermore, there is a positive relationship between insiders＇ trading profit and manipulation of earnings forecasts. As volatility in insider manipulation increases, it is difficult for the investors to predict the real intention of insiders, and insiders may achieve greater benefits from trading. This study also observes that many listed companies hold investor conferences to provide earnings guidance in Taiwan. The reason may be that investor conference is more flexible and has less forecast error cost than the formal financial forecast. This study provides important insights into earnings forecast policy in emerging markets. The competent authority should improve corporate governance and develop monitoring functions to abate forecast manipulation.     

Accounting variables and stock returns： Evidence from Istanbul stock exchange

The fundamental relationship between accounting variables and stock returns is a recurring theme in financial research. One of the major purposes of accounting is to help investors provide reliable, comparable and accurate information. If accounting data are informative about fundamental values and changes in values, they should be correlated with stock price changes. This study provides theory and evidence showing how accounting variables explain stock returns and examines the relationship between the stock returns and accounting variables of listed non financial companies in ISE-100 Indice for 2006-2008 period by using panel data methodology. Empirical analysis consists of 192 observations of 64 companies in years 2006-2008 to examine the effects of inventory, accounts receivable, gross margin, operating expense, return on assets, cash flow, leverage, liquidity, price/earnings, return on equity on stock returns. The results of the study confirm that the predicted roles of fundamental factors and stock returns are significantly related to gross margin, cash flow, leverage and equity variables. The model explains about 13.35 % of the variation of annual stock returns with the leverage variable with most of the significant power.     

A Statistical Analysis of Reliability of Audit Opinions as Bankruptcy Predictors

This research measures the reliability of audit firms in predicting bankruptcy for United States （US） listed financial institutions. The object of analysis is the going concern opinion （GCO）, widely considered as a bankruptcy warning signal to stakeholders. The sample is composed of 42 US listed financial companies that filed for Chapter 11 between 1998 and 2011. To highlight the differences between bankrupting and healthy firms, a matching sample composed of 42 randomly picked healthy US listed financial companies is collected. We concentrate on financial institutions, whereas the existing literature pays considerably greater attention to the industrial sector. This research imbalance is remarkable and particularly unexpected in the wake of recent financial scandals. Literature points out two main approaches on bankruptcy prediction： （1） purely mathematical; and （2） approaches based on a combination of auditor knowledge, expertise, and experience. The use of data mining techniques allows us to benefit from the best features of both approaches. Statistical tools used in the analysis are： Logit regression, support vector machines （SVMs）, and an AdaBoost meta-algorithm. Findings show a quite low reliability of GCOs in predicting bankruptcy. It is likely that auditors consider further information in supporting their audit opinions, aside from financial-economic ratios. The scant predictive ability of auditors might be due to critical relationships with distressed clients, as suggested by recent literature.     

How value relevant are earnings when they are transitory？ Empirical evidence for France

Capital market participants take seriously into consideration the value relevance of earnings for security valuation. This study examines the value relevance of earnings when earnings are transitory, i.e., there is great variability in earnings. It hypothesizes that the relationship between earnings and security returns worsens when earnings are transitory and this robustness is country specific. The dataset consists of more than 1,100 French firm-year observations over a nine year period. Empirical results show that when earnings are transitory, investors pay more attention to operating cash flows and less attention to earnings, a result indicating that investors penalize firms with unstable earnings. These results should be of great importance to financial analysts, investors and bankers for investing and credit decisions, especially after the recent global financial crisis.     

The Effects of Audit Committee Attributes on Fraudulent Financial Reporting

This study aims to examine the relationship between audit committee attributes （audit committee independence, financial expertise, meeting frequency, gender diversity, and ethnic composition） and the propensity for fraudulent financial reporting. The sample includes 116 fraudulent and non-frandulent firms listed on Bursa Malaysia from 2005 to 2010. The finding of this study indicates that audit committee independence is positively associated with fraudulent financial reporting. The higher the proportion of independent or outside directors on the committee, the higher the possibility of financial fraud, and vice versa. The results also show that the expertise of members of the audit committee is negatively associated with corporate fraud. This suggests that when audit committee members are financially literate, they are more competent to curb fraudulent financial reporting. However, the findings for frequency of audit committee meetings, gender, and ethnicity show that there is no relationship between these variables and corporate fraud. The result of this study is robust after controlling for other firm-specific effects.     

英文摘要

Is There Any Auditor＇s Trust to the Clients in Audit Zou Jing Xia Qing Zhou Sheng （Zhongnan University of Economics and Law; Military Economics Academy,Wuhan, Hubei 430073） Abstract： Professional skepticism is an essential important accomplishment for the auditor who is engaged in auditing work. Is there any auditor＇s trust to the clients in the the field of audit which is in contrast to the Professional skepticism？ Using data of Chinese A-share listed companies from 2009 to 2011, this paper explor the relation between the intensity index of trust and the audit fees, and then explains whether there is auditor＇s trust to the clients in the auditing activities. On the whole,the result of study reveals that there is a significant negative correlation between the auditor＇s index of rational trust and the audit fees, but there is no significant positive association between the auditor＇s index of individual trust and the audit fees.Thus it can be thought that, there exists auditor＇s trust to the clients stemming from the rationality in the auditing activities, but there is no evidence showing that the auditor has individual turst to the clients in the audit because of the long familarity with the clients. Keywords： Auditor Trust Audit fees     

Quality of Financial Statements and Tenure of Statement-Related Personnel

This study investigates the association between quality of financial statements and tenure of statement-related personnel. First, we examined whether there is still a significant association between financial statement quality and the tenure of audit partners who are responsible for the quality assurance of financial statements after the implementation of mandatory audit partner rotation. We addressed this issue by using a sample of Taiwanese companies, with which no significant association between audit partner tenure and the magnitude of discretionary accruals （DA）, a common proxy for financial statement quality, was found. Second, we investigated whether an association exists between the financial statement quality and the tenure of management who is responsible for the preparation of financial statements. We also addressed this issue by using Taiwanese data and found a significant association between management tenure （MT） and the magnitude of DA. Our findings provide evidence that audit partner tenure would neither improve nor deteriorate the quality assurance of a financial statement, when there is a mandatory audit partner rotation after a fixed period of time. Whereas how MT affects financial statement quality after the enactment of the mandatory audit partner rotation is dependent on the management position. Increasing tenure of chief executive officer （CEO） and chief financial officer （CFO） will enhance and hinder financial statement quality respectively. In the end, we found a significant interaction of tenure between auditor and CFO. This result implies that the downward bias of CFO on the financial statement preparation can be mitigated by auditors with increasing tenure.     

Does ownership structure matter when CPA deciding types of audit opinions

Ownership structure is one of the most important and basic corporate governance characteristics. Thus, does the ownership structure of a firm have an effect on the type of audit opinion it receives from CPA？ This paper uses a sample including 1246 non-financial listed companies from China A-share market in 2003. Empirical results show： for listed firms, external auditor＇s propensity to qualify is lower with lower proportion of public shares, or with higher concentration of shares at a marginal significant level. However, the proportions of state-owned shares and institutional shares have no significant effects on audit opinions. A possible explanation is that the ownership structure influences risk awareness and negotiation power of audit firms, influences negotiation power of clients, and then ultimately influences auditors＇ reporting decision and audit opinions. The potential policy implication is： a more dispersed ownership structure and/or a higher proportion of public shares are preferable for higher audit reporting conservatism and audit quality in China.     

Are Islamic incomes relevance to commercial banks in Malaysia？

A significant price-to-earnings relation is evident in many research findings, which includes study on Malaysia Stock Markets, that the strength, consistency and magnitude of the relation are not as large as those reported in institutionally more developed markets. However, the price adjustment is stronger if price reaction is measured over a long periods, which is consistent to speculative trading. Firm-specific variables such as revenue, firm size and debt-equity have no incremental information content beyond earnings implies that the market monitoring process in an emerging market focuses on earnings only during financial announcement. Therefore, this paper revisited the study on the relevant of accounting banks in Malaysia using the earnings response coefficients, earnings by looking at Islamic Income for commercial which are the earnings-to-share return coefficients that are estimated for sub earnings components by including Islamic banking incomes in the analysis. This paper discovered that though there is a positive effect, the earnings from Islamic banking operation are small. Thus, the total earnings as well as the sub-categories of earnings of banks appear to enter the pricing considerations of investors.     

Does Big 4 Affect the Earnings Response Coefficient （ERC）？ Evidence From Malaysia

This study examines the effect of audit quality （AQ） on the earnings response coefficient （ERC） based on a sample of 1,884 firm-year observations comprising 471 firms listed on the Bursa Malaysia from 2007 to 2010. This study tests whether AQ affects ERC after controlling the established determinants of ERC： beta, growth, earnings persistence, and size. Using reverse regression, the study confirms that Big 4 is significant and positive to ERC. Auditor switching from non-Big 4 to Big 4 indicates the same results; however, the switching of auditors among Big 4 is not significant. The study thus provides systematic and comprehensive additional evidence on the effect of AQ via the measurement of Big 4; and auditor switching from non-Big 4 to Big 4 and switching among Big 4 on ERC. This is an important contribution to the literature but especially so given that the evidence comes from Malaysia, an emerging economy, whereas the existing empirical literature relates mainly to the developed countries.     

The Relationship Among Ethical Climate,Job Satisfaction,Organizational Commitment,and External Auditor＇s Turnover Intention

This study attempts to examine the relationship among ethical climate, job satisfaction, organizational commitment, and turnover intention in the context of the Malaysian external auditor＇s work environment. The questionnaire is sent to a sample of external auditors from Malaysian Big Four （Klynveld Peat Marwick Goerdeler （KPMG）, Ernst and Young, Deloitte KassimChan, and PricewaterhouseCoopers （PwC）） main offices. There are 167 useable responses. The regression results have provided evidence that ethical climate is directly, significantly, and positively associated with job satisfaction. In contrast, ethical climate appeared not to be directly related with external auditor＇s turnover intention. Both job satisfaction and organizational commitment were identified as significant predictors in explaining turnover intention, since they had a significant and negative effect on external auditor＇s turnover intention. This study also implied that job satisfaction had a significant effect on organizational commitment. Furthermore, the findings revealed that organizational commitment partially mediated the relationship between job satisfaction and turnover intention. The results extend the literature on external auditor＇s turnover intention and provide insights for human resource management in accurately assessing employee＇s turnover intention in order to improve retention and reduce actual turnover particularly in audit firms.     

Good Corporate Governance （GCG） Mechanism and Audit Delay： An Empirical Study on Companies Listed on the Indonesia Stock Exchange （IDX） in the Period of 2009-2011

Audit delay is a delay in reporting audit to the Indonesia Stock Exchange （IDX） after the allotted time of 90 days after closing the book. Delay to publish audit report will affect the value of infromation, causing a bad sign for the company. As good corporate governance （GCG） is one way to solve the different interests, practices, and culture, companies implement GCG in an attempt to get more value. This study aims to measure the impact of corporate governance mechanisms on audit delay in companies listed on the IDX in the period of 2009-2011. Variables of GCG mechanism consist of institutional ownership, number of audit committee members, and the percentage of independent commissioners. Purposive sampling method is used in sample selection procedure. Samples comprise 42 companies listed on the IDX. The simultaneous test results show that all the variables have a significant influence on audit delay. By the partial test, number of audit committee members has significantly affected audit delay, while institutional ownership and independent commissioners have no significant effect on audit delay. This study is limited to use only three variables to study their influence on audit delay in the reseach period of only three years.     

The Audit Opinion of Earnings Management in Listed Companies of China

The paper testes the relationship between audit opinions and financial sensitive zones and accounts on the basis of the data of A-share companies in China. The author finds that when ROE of listed companies is in the small-profit zone or in the large-loss zone, the probabilities that they get modified audit opinions increase. But the right-offering zone, accrual accounts and accounts below the line have no significant effects on the modified audit opinions. Besides, the author also finds that the ratio of accounts receivable to asset, debt ratio, previous year＇s audit opinion and change of CPA firms have significant positive effects on the modified audit opinions, while the ratio of major business revenue and size of companies have no notable effects. Some other factors such as cash ratio, age of the listing and CPA firm ranking have no consistent and continuous effects.     

Financial statements in less developed countries： What do preparers demand？

This study reports on an empirical investigation of the characteristics, attitudes, and beliefs of preparers of external financial reports in a less developed country. The basic research instrument consisted of a questionnaire in two parts： the first addressing attitudes of professional accountants toward annual financial reports generally; the second, more specifically measuring the importance of the information items to preparers. Our results suggest that the independent auditor is the most influential group in decision-making processes. As in many developed countries, the auditor＇s report and the regulatory framework are considered to have a major influence on financial reporting practices. Preparers believe that a lack of knowledge of external users＇ needs and lack of reporting standards and accepted accounting principles are the main concerns with corporate financial reports in Iran. The results showed that the balance sheet, auditors＇ report, and income statement in that order are the three most important parts of the annual reports.     

Does an Auditor＇s Within-Industry Market Share Still Capture Auditor Industry Expertise in a Mandatory Audit Partner Rotation Regime？

Prior studies commonly use an auditor＇s market share in an industry as a proxy for auditor industry expertise and find that audit quality is positively related to an audit partner＇s within-industry market share in a voluntary audit partner rotation regime where the length of the client-partner relationship is not limited. Mandatory audit partner rotation, however, limits the length of the client-partner relationship and can artificially increase or decrease the market shares of incoming and departing partners, thus making the audit partner＇s within-industry market share an unreliable proxy for auditor industry expertise. Using a sample of banks in Taiwan, we find that audit quality is positively related to an audit partner＇s within-industry market share in the voluntary audit partner rotation regime. However, such a positive relation disappears in the mandatory audit partner rotation regime. Thus, we conclude that mandatory audit partner rotation decouples the link between an audit partner＇s within-industry market share and auditor industry expertise and caution researchers against using an audit partner＇s within-industry market share as a proxy for auditor industry expertise in a mandatory audit partner rotation regime.     

The role of self-accounting and financial capability in consumer credit decisions

The role of financial capability in the consumers＇ financial behaviour has been widely analyzed by the literature. The same happened for the relationship between debt and financial capability. The consensus about the benefits of an increase in the levels of financial literacy collides with a diversity of opinions on what the best solutions to increase financial capability. While methods based on traditional teaching may not be an effective solutions and they could not provide results in the short term, solutions oriented to support consumers in important financial decisions （requests for funding, choice of retirement solutions, etc.） may show greater effectiveness. Studies in literature have shown the tendency of subjects with high levels of financial capability to adopt a long term view and to upgrade their daily financial behaviour with attitudes and practices related to self-finance （budget, financial check-up, saving for goals, etc.） The paper focuses on the relationship between financial capability and self-accounting practices, interpreting the latter as evidence of conduct financially aware. After a review of the literature designed to emphasize the role of self-accounting in the context of personal finance, a financial check-up based tool is proposed, pointing out how the financial accounts＇ schemes and logics （regular budget, estimates and forecasts checking targets） may find useful application in the context of personal finance.     

Empirical Analysis of the Market Effects of China＇s Listed—— Company＇s Dividend Policy ——Empirical Evidences from Shanghai Stock Exchange from 2004 to 2005

Dividend policy is one of the three core contents of financial management in listed companies. On one hand, it is the extension of financial and investment activities; on the other hand, appropriate dividend policy can not only set up a good company reputation, but also arouse enthusiasm of many investors to continue invest in this company, consequently acquire long and stable development opportunities and conditions. In this paper, the author has put forward some suggestions in order to solve the problems which existing in Chinese listed companies＇ dividend policies based on the result of positive test. Firstly, optimize the structure of equity title and perfect the corporate governance. Secondly, to establish wholesome shareholder protection mechanism, and also it is important measure for investors, especially medium and small investors to protect their rights and interests. According to the present situation of Chinese stock market, the authors consider we can protect the shareholder＇s benefits by carrying out cumulative vote system, establishing hortative derive lawsuit system, perfecting civil compensation system and establishing shareholder voting removing system and so on. Thirdly, the establishment of listed companies＇ dividend policy and the release of message should be standardized for the sake of good relationship of melon-cutting and corporation＇s refinancing plan. Finally, listed companies＇ dividend policy can be optimized by modifying and perfecting stock dividend distribution mode of accounting management, perfecting exit mechanism of listed companies.     

Effects of Mandatory Audit Firm Rotation Upon Quality of Audit： The Perception of Audit Firms Evidence From Bahrain

The objectives of this study are： （1） to explore current audit appointment practices by audit firms in Bahrain; （2） to look into the opinions of audit firms in Bahrain on potential effects provided by implementing mandatory audit firm rotation （audit quality）; and （3） to investigate audit firms＇ views in implementing mandatory audit firm rotation in Bahrain. To achieve these objectives, a questionnaire was developed and distributed to respondents that consist of all auditors working in audit firms in Bahrain. The findings indicated that there is a significant relationship between mandatory audit firm rotation and quality of audit. The study also indicated that longer partner tenure makes the auditor＇s performance lack the quality in the auditing process. The average mean for all questions of the hypothesis together is 2.73 with average standard deviation of 0.94 which is less than half of the mean. This means that there is no dispersion among respondents about the questions of the hypothesis. Also, the analysis shows that the t-value is 29.922, which is greater than the table critical value of t （1.66）, and the p-value obtained is 0.000 which is less than the value of significance at p 〈 0.05. These results confirm statistically that there is a significant relationship, so the null hypothesis is rejected and the alternative hypothesis is accepted.