Mediating impact of integrated reporting on audit quality and market reactions in Africa: evidence from South Africa

IF 2.4 Q2 BUSINESS, FINANCE Accounting Research Journal Pub Date : 2024-07-05 DOI:10.1108/arj-01-2023-0009
Amon Bagonza, Yan Chen, Frederik Rech
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Abstract

Purpose

The purpose of this study is to investigate the mediating impact of integrated reporting on the relationship between audit quality and market reactions in Africa using South Africa as a sample.

Design/methodology/approach

The study sample size consists of 119 firms listed on the Johannesburg Stock Exchange. The study was carried out for the period 2011–2019. Market reactions were proxy by share price and adjusted market returns. The authors controlled for the effects of market reactions by using other firm specifics like operating income, assets, leverage and return on assets and thereafter carried out robustness checks included under additional analysis.

Findings

Results from the study showed that integrated reporting partially mediates the relationship between audit quality and market reactions. Moreover, audit quality has a positive significant impact on market reactions in the form of the share price. The results were obtained in addition to a robustness check using adjusted market returns as a proxy for market reactions.

Practical implications

Regulators and standard setters in other countries should make integrated reporting mandatory. This study not only informs the public and investors about the organization’s business performance but also reveals auditor assurances that enchase market confidence in the company.

Social implications

Exploring the mediating impact of integrated reporting on the relationship between audit quality and market reactions yields valuable insights. Integrated reporting, which combines financial and non-financial information, influences how investors perceive and react to audit quality. Understanding this interplay could shed light on the broader implications for corporate transparency and accountability.

Originality/value

The authors are the first to conduct such a study in an emerging economy. Hence, the authors used integrated reporting as a new variable in the study of audit quality and market reactions. Furthermore, the authors used adjusted market returns under robustness checks to check if audit quality has an impact on market reactions.

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综合报告对非洲审计质量和市场反应的中介影响:来自南非的证据
本研究的目的是以南非为样本,调查综合报告对非洲审计质量与市场反应之间关系的中介影响。研究样本包括在约翰内斯堡证券交易所上市的 119 家公司。研究时间跨度为 2011-2019 年。市场反应以股价和调整后的市场回报率为代表。作者利用营业收入、资产、杠杆率和资产回报率等其他公司的具体情况控制了市场反应的影响,并随后进行了稳健性检查,包括附加分析。 研究结果研究结果表明,综合报告部分调解了审计质量与市场反应之间的关系。此外,审计质量以股价的形式对市场反应有积极的显著影响。此外,还使用调整后的市场回报率作为市场反应的替代变量,对上述结果进行了稳健性检验。 实践意义其他国家的监管机构和标准制定者应强制推行综合报告制度。这项研究不仅能让公众和投资者了解组织的经营业绩,还能揭示审计师的保证,从而增强市场对公司的信心。社会意义探讨综合报告对审计质量和市场反应之间关系的中介影响可获得有价值的启示。综合报告结合了财务和非财务信息,会影响投资者对审计质量的看法和反应。了解这种相互影响可以阐明对企业透明度和问责制的广泛影响。原创性/价值作者首次在新兴经济体开展此类研究。因此,作者将综合报告作为研究审计质量和市场反应的一个新变量。此外,作者在稳健性检查中使用了调整后的市场回报率,以检验审计质量是否对市场反应产生影响。
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来源期刊
Accounting Research Journal
Accounting Research Journal BUSINESS, FINANCE-
CiteScore
5.00
自引率
0.00%
发文量
13
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