Related Party Transactions and the Relation between Political Connections and Audit Report Lag

Document Type : Research Paper

Authors

1 Mahdi Salehi Associate Professor Accounting and Management Department , Ferdowsi University of Mashhad, Iran

2 Mahmoud Toorchi , Ph.D. student, Islamic Azad University Qaenat Branch *

3 Department of Accounting,Qaenat Branch, Islamic Azad University, Qaenat, Iran

Abstract

The purpose of this study is to explain the moderating role of related party transactions in the relation between political connections and ‌audit report lag. ‌One of the criteria for financial reporting quality is being up-to-date. ‌On the other hand, in politically minded firms, managers find incentives for potential benefits, which can lead to a loss of their rights. ‌The sample of this research consists of 156 firms listed in Tehran Stock Exchange during the period of 2012 to 2016. ‌The research findings based on the panel data and multi-variate linear regression analysis show that political connections lead to an increase in the audit report lag. ‌Related party transactions increase the audit report lag as well as strengthen the relation between political connections and the audit report lag. ‌This confirms that firms with a political relationship with dealers use related party transactions to hide some transactions they do. 

Keywords


خیرالهی، ‌فرشید. ‌ایوانی، ‌فرزاد. ‌ابوالوفایی، ‌سجاد. ‌(1394). ‌بررسی رابطه بین کیفیت سود و تأخیر در گزارش حسابرسی. ‌پایان نامه جهت کسب درجه کارشناسی ارشد حسابداری. ‌دانشکده ادبیات و علوم انسانی. ‌دانشگاه رازی. ‌
رضایی، ‌فرزین. ‌افروزی، ‌لیلا. ‌(1394). ‌رابطه هزینه بدهی با حاکمیت شرکتی در شرکت‌های دارای ارتباطات سیاسی، ‌فصلنامه پژوهش حسابداری: ‌4، ‌112-85. ‌
صفری گرایلی، ‌مهدی. ‌(1396). ‌تاخیر غیرعادی گزارش حسابرسی و تجدید ارائه صورت‌های مالی آتی: ‌نقش تعدیلی وابستگی اقتصادی و تخصص صنعت حسابرس. ‌دانش حسابداری و حسابرسی مدیریت: ‌6(23)، ‌168-155..‌ ‌
ملأ ایمنی، ‌وحید. ‌مرفوع، ‌محمد. ‌(1394). ‌رابطه بین کیفیت افشای اطلاعات و تأخیر در زمان صدور گزارش حسابرسی. ‌فصلنامه مطالعات تجربی حسابداری مالی: ‌11( 45); 71-51. ‌
محسنی، ‌عبدالرضا. ‌(1397). ‌ارتباطات سیاسی و هزینه سرمایه حقوق صاحبان سهام در شرکت‌های پذیرفته شده در بورس اوراق بهادار تهران. ‌مهندسی مالی و مدیریت اوراق بهادار: ‌9( 24); 291-273. ‌
مهربانپور، ‌محمدرضا. ‌جندقی قمی، ‌محمد. ‌محمدی، ‌منصور. ‌(1396). ‌بررسی اثر روابط سیاسی شرکت‌ها بر به‌کارگیری معاملات غیرعادی با اشخاص وابسته. ‌فصلنامه حسابداری ارزشی و رفتاری: ‌۲ (3);168- 147. ‌
نمازی، ‌محمد. ‌پژوهی، ‌محمدرضا. ‌کرمی، ‌ماندانا. ‌(1395). ‌بررسی تأثیر مالکیت شرکت‌های خانوادگی بر کنترل داخلی، ‌ریسک حسابرسی، ‌حقالزحمه حسابرسی و تأخیر در گزارش حسابرسی. ‌پایاننامه جهت کسب درجه کارشناسی ارشد حسابداری. ‌دانشکده علوم اقتصادی. ‌دانشگاه شیراز. ‌
Ahsan, Habib. ‌, Abdul, Haris Muhammadi. ‌(2016). ‌Political connections and audit report lag: ‌Indonesian evidence, International Journal of Accounting & Information Management,12 (2), 1-35. ‌
Apadore, K. ‌, Mohd Noor, M. ‌(2013). ‌Determinants of Audit Report Lag and Corporate Governance in Malaysia. ‌International Journal of Business and Management. ‌8 (15), 18-30. ‌
Ashton, R. ‌H. ‌, Willingham, J. ‌J. ‌and Elliott, R. ‌K. ‌(1987). ‌An empirical analysis of audit delay, Journal of Accounting Research, 25(2), 275-292. ‌
Bamber, E. ‌M. ‌, Bamber, L. ‌S. ‌and Schoderbek, M. ‌P. ‌(1993), Audit structure and other determinants of audit report lag: ‌An empirical analysis, Auditing: ‌A Journal of Practice & Theory, 2 (1), 1-23. ‌
Beasley, M. ‌S. ‌(2016). ‌An Empirical Analysis of the Relation Between the Board of Director Composition and Financial Statement Fraud, The Accounting Review, 71 (4), 443–65. ‌
Ben Rejeb Attia, Mouna. ‌, Lassoued, Naima. ‌(2018). ‌Financial reporting timeliness and the value relevance of earnings: ‌Evidence from banks in the MENA countries, ‌The International Trade Journal, 2 (5), 1–25. ‌
Carslaw, C. ‌A. ‌P. ‌N. ‌and Kaplan, S. ‌E. ‌(1991). ‌An examination of audit delay: ‌Further evidence from New Zealand, Accounting and Business Research, 22 (85), 21-32. ‌
Ghafran, Ch. ‌, Yasmin, S. ‌(2017). ‌Audit committee chair and financial reporting timeliness: ‌A focus on financial, experiential and monitoring expertise. ‌International Journal of Auditing, 22 (1), 1-35. ‌
Gul, F. ‌A. ‌(2006). ‌Auditors' Response to Political Connections and Cronyism in Malaysia, Journal of Accounting Research, 44 (5), 931-963. ‌
Guedhami, O. ‌, Pittman, J. ‌A. ‌and Saffar, W. ‌(2014), Auditor choice in politically connected firms, Journal of Accounting Research, 52 (1), 107-162. ‌
Habib, A. ‌, Muhammadi, A H. ‌, Jiang, H. ‌(2017). ‌Political connections, related party transactions, and auditor choice: ‌Evidence from Indonesia. ‌Journal of Contemporary Accounting & Economics, 13 (2), 1–19. ‌
Habib, A. ‌and Bhuiyan, M. ‌B. ‌U. ‌(2011). ‌Audit firm industry specialization and the audit report lag, Journal of International Accounting, Auditing and Taxation, 20 (1), 32-44. ‌
Houston, J. ‌F. ‌, Jiang, L. ‌, Lin, C. ‌and Ma, Y. ‌(2014). ‌Political connections and the cost of bank loans, Journal of Accounting Research, 52 (1), 193-243. ‌
Jaggi, B. ‌and Tsui, J. ‌(1999). ‌Determinants of audit report lag: ‌further evidence from Hong Kong, Accounting and Business Research, 30 (1), 17-28. ‌
Khan, A. ‌, Mihret, D. ‌G. ‌and Muttakin, M. ‌B. ‌(2016). ‌Corporate political connections, agency costs and audit quality, International Journal of Accounting & Information Management, 24 (4), 357-374. ‌
Khlif, H. ‌and Samaha, K. ‌(2014). ‌Internal control quality, Egyptian standards on auditing and external audit delays: ‌Evidence from the Egyptian Stock Exchange, International Journal of Auditing, 18 (2), 139-154. ‌
Kheiralahi, F. ‌, Ivani, F. ‌, Abu al-Voafai, S. ‌(2015). ‌Study of the relationship between earnings quality and delay in audit report, Accounting Thesis. ‌(in persian)
Kim, C. ‌& Zhang, L. ‌(2016). ‌Corporate Political Connections and Tax Aggressiveness. ‌Contemporary Accounting Research, 33(1), 78-114. ‌
Mehrabanpour, M. ‌, Jandaghi Ghomi, M. ‌, Mohammadi, M. ‌(2017). ‌Political Connections and Abnormal Transactions by Related Parties. ‌Iranian Journal ‌of Value and Behavioral Accountings Achievements, 2 (3), 147-168. ‌(in persian)
Mohseni, A. ‌(2018). ‌Political connections and the cost of equity capital in listed firms on Tehran Stock Exchange. ‌Financial engineering and securities management, 9(34), 273-291. ‌(in persian)
Namazi, M. ‌, Pejouhi, M R. ‌, Karami, M. ‌(2016). ‌Investigating the Impact of Family Ownership on Internal Control, Audit Risk, Audit Fees, and Delay in Audit Report, Accounting Thesis. ‌(in persian)
Ng, P. ‌P. ‌H. ‌and Tai, B. ‌Y. ‌K. ‌(1994). ‌An empirical examination of the determinants of audit delay in Hong Kong, The British Accounting Review, 26 (1), 43-59. ‌
Nurul. ‌, Houqe. ‌Muhammad. ‌, Reza, M. ‌Monem and Tony van Zijl. ‌(2012). ‌Government quality, auditor choice and adoption of IFRS: ‌A cross country analysis, Advances in International Accounting, 28 (2), 307-316. ‌
Rezaei, F. ‌, Afrouzi, L. ‌(2015). ‌The Relation between Cost of Debt and Corporate Governance in Firms with Political Connections, Accounting Research, 4 (4), 85-112. ‌(in persian)
Safari Gerayli, M. ‌(2017). ‌Abnormal Audit Report Lags and Future Restatements: ‌Moderating Role of Economic Bonding and auditor industry specialization. ‌Journal of Management Accounting and Auditing Knowledge, 6(23), 155-168. ‌(in persian)
Mollaimani, V; Marfou, M.‌ ‌(2015). ‌The relationship between Disclosure Quality and Audit Report Lag, Quarterly Journal of Empirical Financial Accounting Studies, 12 (45), 59-80. ‌(in persian)
Zhi WangMei-Hui. ‌, ChenChen Lung. ‌, ChinQi Zheng. ‌(2017). ‌Managerial ability, political connections, and fraudulent financial reporting in China, Journal of Accounting and Public Policy, 36(2), 12- 28. ‌