IDEAS home Printed from https://ideas.repec.org/h/eme/afeczz/s1569-373220220000021004.html
   My bibliography  Save this book chapter

Does Effort Pay Off? Evidence From Internal Audit in Israel

In: Empirical Research in Banking and Corporate Finance

Author

Listed:
  • Omer Berkman
  • Shlomith D. Zuta

Abstract

The research question we address in this paper is whether the effort invested by the internal auditor in the firm is associated with better firm performance. Our measure of effort is the number of audit hours invested in the firm, and firm performance is measured by the likelihood of a restatement of the firm's financial results. This study is the first to analyze this question, an endeavor made possible by a difference in disclosure requirements regarding internal audit effort between the US and Israel. Our analysis is conducted using hand-collected data on firms traded on Tel Aviv Stock Exchange (TASE) during the period 2010–2014. We expect that auditor effort is negatively associated with the likelihood of restatements of the firm's financial results. Indeed, our findings support this hypothesis. We also consider the association between restatements and two audit committee characteristics – the degree of independence and the degree of expertise of its members. However, these associations are not upheld by the data.

Suggested Citation

  • Omer Berkman & Shlomith D. Zuta, 2022. "Does Effort Pay Off? Evidence From Internal Audit in Israel," Advances in Financial Economics, in: Empirical Research in Banking and Corporate Finance, volume 21, pages 101-118, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:afeczz:s1569-373220220000021004
    DOI: 10.1108/S1569-373220220000021004
    as

    Download full text from publisher

    File URL: https://www.emerald.com/insight/content/doi/10.1108/S1569-373220220000021004/full/html?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/S1569-373220220000021004/full/epub?utm_source=repec&utm_medium=feed&utm_campaign=repec&title=10.1108/S1569-373220220000021004
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://www.emerald.com/insight/content/doi/10.1108/S1569-373220220000021004/full/pdf?utm_source=repec&utm_medium=feed&utm_campaign=repec
    Download Restriction: Access to full text is restricted to subscribers
    File URL: https://libkey.io/10.1108/S1569-373220220000021004?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    Restatements; internal audit; investment in internal audit; audit committee; audit committee independence; audit committee expertise; board of directors; corporate governance; G34; G38;
    All these keywords.

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eme:afeczz:s1569-373220220000021004. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Emerald Support (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.