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Implications of sustainability reporting and institutional investors’ ownership for external audit work: evidence from Saudi Arabia

Ameen Qasem (Department of Accounting, College of Business Administration, University of Hail, Hail, Saudi Arabia and Accounting Department, Faculty of Administrative Sciences, Taiz University, Taiz, Yemen)
Wan Nordin Wan-Hussin (Othman Yeop Abdullah Graduate School of Business, Kuala Lumpur Campus, Universiti Utara Malaysia, Sintok, Malaysia)
Adel Ali Al-Qadasi (Department of Accounting, College of Science and Humanities, Shaqra University, Al-Dawadmi, Saudi Arabia and Department of Accounting, Hodeidah University, Hodeidah, Yemen)
Belal Ali Abdulraheem Ghaleb (Tunku Puteri Intan Safinaz School of Accountancy (TISSA), Universiti Utara Malaysia, Sintok, Malaysia and Department of Accounting, Hodeidah University, Hodeidah, Yemen)
Hasan Mohamad Bamahros (Department of Accounting, College of Business Administration, University of Hail, Hail, Saudi Arabia and College of Management Science, University of Aden, Aden, Yemen)

Journal of Financial Reporting and Accounting

ISSN: 1985-2517

Article publication date: 31 July 2023

261

Abstract

Purpose

This study aims to assess whether non-financial corporate social responsibility (CSR) information decreases audit risk and audit scope and enables speedier completion of audit reports. The study also investigates whether institutional investors’ ownership (IIO) has an influence on the association between CSR disclosures and audit report lag (ARL).

Design/methodology/approach

This study uses a sample of 154 Saudi firms over 2016–2021 (837 observations) and applies ordinary least square regression to examine the study hypotheses.

Findings

This study’s results show that ARL is significantly shorter for firms with higher CSR disclosures. Furthermore, the findings show that IIO has no significant impact on the association between CSR disclosures and ARL.

Originality/value

This study offers new insights into how auditors respond to CSR disclosures and whether institutional investor monitoring influences the audit process in an emerging economy.

Keywords

Acknowledgements

The authors sincerely thank the Saudi Capital Market Authority for its full financial support, which has been indispensable in conducting this research and achieving meaningful insights.

Funding: This research funded by: Capital Market Authority – Research Agenda H2 2021.

Citation

Qasem, A., Wan-Hussin, W.N., Al-Qadasi, A.A., Ghaleb, B.A.A. and Bamahros, H.M. (2023), "Implications of sustainability reporting and institutional investors’ ownership for external audit work: evidence from Saudi Arabia", Journal of Financial Reporting and Accounting, Vol. ahead-of-print No. ahead-of-print. https://doi.org/10.1108/JFRA-02-2023-0097

Publisher

:

Emerald Publishing Limited

Copyright © 2023, Emerald Publishing Limited

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