Applied Research in Financial Reporting

Applied Research in Financial Reporting

The impact of the auditor's expertise in the business sector on the relationship between managers' non-adherence to ethical principles and the divergence of investors' opinions

Document Type : Original Article

Authors
mohsen tohidloo 1
ali bayat 2
Ali Mohammadi 3
Vahab Rostami 4
1 Accounting Department, Zanjan Branch, Islamic Azad University, Zanjan, Iran
2 Assistant professor of Accounting Department of Accounting, Zanjan Branch, Islamic Azad University, Zanjan, Iran.
3 Department of Accounting, Zanjan Branch, Islamic Azad University, Zanjan, Iran
4 Assistant Professor, Accounting Dept. Payame Noor University, Tehran, Iran
Abstract
Purpose- The purpose of the present research is to investigate the impact of the auditor's expertise in the industry on the relationship between the behavioral and ethical tendencies of management and the divergence of investors' opinions.
Research . A multivariate linear regression model was used to test the research hypotheses. To calculate the divergence of investors' behavior, according to the research of Silva and Cerquera (2021) and Salehi et al. Managers' behavioral biases have been measured by the two factors of real profit management and managers' overconfidence, as well as ethical biases by the two factors of dishonesty (profit smoothing) and management error (fraud in financial statements).
findings - The results of the research hypotheses test showed that fraud in financial statements, real profit management, profit smoothing and management overconfidence have a direct and significant relationship with the divergence of investors' opinions.
Conclusion - The current research provided evidence that shows that the behavioral and ethical tendencies of managers have a direct and significant impact on the divergence of investors' opinions and increases this factor, and the auditor's expertise can reduce these effects.
Keywords
auditor's expertise in the industry
behavioral and ethical tendencies of managers
divergence of investors' opinions
audit quality

  • Receive Date 16 March 2024
  • Revise Date 05 June 2024
  • Accept Date 17 September 2024