Risk Reporting During a Crisis: Evidence from the Egyptian Capital Market

Research purpose: This paper examines corporate risk disclosure (CRD) practices and determinants in the annual reports of Egyptian listed companies during the 2011 political crisis (uprising) in Egypt. Design/Methodology/Approach: Content analysis of the annual reports of a sample of nonfinancial listed companies representing different industry sectors was conducted to investigate attributes and factors underlying their risk disclosures. Findings: The findings demonstrate that companies disclosed more monetary, future and good risk information. The results show a positive and significant relationship between company size and the level of CRD, a positive but insignificant relationship between the extent of CRD and some company-specific characteristics: industry type, profitability and cross-listing, and a negative and insignificant relationship between corporate reserves and the level of CRD. Research Limitations/Implications: A larger sample size would be needed for greater generalization of the findings. This study extends the literature on CRD by examining CRD practices at a time of current and ongoing crisis. However, more research is needed to examine variations in CRD practices before and after the 2011 political crisis. Practical Implications: The results could be used by information users, companies and the capital market authority to inform policy-making and tighten regulations to improve CRD. Recommendations are made for improving the quality and informativeness of risk information. Originality/Value: It is important to investigate CRD practices, considering the dearth of research, particularly in emerging capital markets and during crises, when companies are exposed to more, especially uncontrollable, risks. This study fills a void in literature by examining CRD practices during the 2011 political crisis in Egypt

Determinants of voluntary audit and voluntary full accounts in micro- and non-micro small companies in the UK

This is an Author's Accepted Manuscript of an article published in Accounting and Business Research, 42(4), 441 - 468, 2012, copyright Taylor & Francis, available online at: http://www.tandfonline.com/10.1080/00014788.2012.667969.This study investigates the link between the auditing and filing choices made by a sample of 592 small private companies, which includes 419 micro-companies. It examines decisions made in connection with the 2006 accounts following UK's adoption of the maximum EU size thresholds in 2004, and the impact of the proposed Directive on the annual accounts of micro-companies. The research extends the model of cost, management and agency factors associated with voluntary audit, and develops a complementary model for voluntary full accounts. The results show the benefits of placing full audited accounts on public record that outweigh the costs for a significant proportion of companies. In non-micro small companies, voluntary audit is determined by cost and agency factors, whereas in micro-companies it is driven by cost, management and agency factors. In both groups, the predictors of voluntary full accounts include management and agency factors, and choosing voluntary audit is one of the key factors. The study provides models that can be tested in other jurisdictions to provide evidence of the needs of micro-companies, and the discussion of the methodological challenges for small company researchers in the UK makes further contribution to the literature

Audit Tendering in the UK: A Review of Stakeholders’ Views

This study reports the results of a content analysis of the comment letters sent to the UK Financial Reporting Council (FRC), in response to its consultation document on the 2012 revisions of the UK Corporate Governance Code, concerning the proposal for mandatory audit tendering. The results indicate a general support for the FRC’s proposals with a number of key concerns related to audit quality, auditor independence and audit cost. There is also clear conflict of interests among some stakeholder groups such as audit firms and companies on one side and institutional investors on the other side. There is evidence of conflict of interest between Big 4 and non-Big 4 audit firms. Implications for future consultations and legislations are also discussed

Big Data and Changes in Audit Technology: Contemplating a Research Agenda

This study explores the most recent episode in the evolution of audit technology, namely the incorporation of Big Data and Data Analytics (BDA) into audit firm approaches. Drawing on 22 interviews with individuals with significant experience in developing, implementing or assessing the impact of BDA in auditing, together with publicly available documents on BDA published within the audit field, the paper provides a holistic overview of BDA-related changes in audit practice. In particular, the paper focuses on three key aspects, namely the impact of BDA on the nature of the relationship between auditors and their clients; the consequences of the technology for the conduct of audit engagements and the common challenges associated with embedding BDA in the audit context. The study’s empirical findings are then used to establish an agenda of areas suitable for further research on the topic. The study is one of the first empirical accounts providing a perspective on the rise of BDA in auditing