Audit committee strength and auditors' risk assessments: The moderating role of CEO narcissism

Yasemin Karaibrahimoglu*, Jim Emanuels, Anna Gold, Philip Wallage

*Bijbehorende auteur voor dit werk

OnderzoeksoutputAcademicpeer review

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Samenvatting

This paper examines the impact of two elements of the client's control environment on auditor's assessment of the risk of material misstatement: audit committee strength and CEO narcissism, the latter of which is a component of management philosophy, operating style, and tone at the top. We predict and find that auditors' risk assessments are adequately responsive to both elements; however, importantly, a strong audit committee decreases perceived risk assessments only when the client has a CEO with less narcissistic characteristics. In other words, our findings suggest that the presence of narcissistic CEOs' attitudes weakens the perceived audit committee effectiveness, leading auditors to rely less on a strong audit committee. Our findings contribute to the auditing literature by exploring auditors' responses to the complex dynamics between management boards and those charged with governance. From a practical perspective, our results suggest that auditing standards and practice guidance should consider making such complexities and the role of management attitudes and styles even more explicit.
Originele taal-2English
Artikelnummer12243
Pagina's (van-tot)661-674
Aantal pagina's14
TijdschriftInternational Journal of Auditing
Volume25
Nummer van het tijdschrift3
Vroegere onlinedatum30-jun-2021
DOI's
StatusPublished - nov-2021

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