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The impact of changes in cash flow statement items on audit fees: evidence from Iran

Author

Listed:
  • Mahdi Salehi
  • Masoumeh BehrouziYekta
  • Hossein Rezaei Ranjbar

Abstract

Purpose - The purpose of this study is to determine whether the incremental difference between the actual level of cash from the optimal amount (excess and insufficient cash) to the abnormal amount of cash (abnormal positive and negative changes in cash) leads to an increase in audit fees. Design/methodology/approach - To investigate the main purpose of this study, first, the authors, respectively, estimate the optimal cash flow and the normal (optimal) changes in cash by Oler and Picconi (2014) and Bates, Kahle and Stulz (2009) models for each period. In this regard, financial information of 116 companies listed on the Tehran Stock Exchange is selected during the period 2011-2016. Findings - The results of this investigation indicate that holding an excessive amount of cash than optimal size and audit fees are negatively associated. Moreover, it is documented that abnormal changes in cash flow and audit fees are not significantly associated. Originality/value - The outcomes of the current study contribute to providing an accurate estimation to determine audit fees in emerging markets.

Suggested Citation

  • Mahdi Salehi & Masoumeh BehrouziYekta & Hossein Rezaei Ranjbar, 2020. "The impact of changes in cash flow statement items on audit fees: evidence from Iran," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 18(2), pages 225-249, May.
    • Handle: RePEc:eme:jfrapp:jfra-09-2018-0074
    DOI: 10.1108/JFRA-09-2018-0074
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    Cited by:

    1. Ahmad Yuosef Alodat & Zalailah Salleh & Hafiza Aishah Hashim & Farizah Sulong, 2021. "Corporate governance and firm performance: empirical evidence from Jordan," Journal of Financial Reporting and Accounting, Emerald Group Publishing Limited, vol. 20(5), pages 866-896, August.

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