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The Effect of Auditor Characteristics on the Quality of Segment Disclosures of Diversified Firms
Elkelani, Sarah Ahmed
Elkelani, Sarah Ahmed
Date
2024-06
Authors
Type
Thesis
Degree
Description
A Master of Science thesis in Accounting by Sarah Ahmed Elkelani entitled, “The Effect of Auditor Characteristics on the Quality of Segment Disclosures of Diversified Firms”, submitted in June 2024. Thesis advisor is Dr. Feras Salama and thesis co-advisor is Dr. Abed Al-Nasser Abdallah. Soft copy is available (Thesis, Approval Signatures, Completion Certificate, and AUS Archives Consent Form).
Abstract
Notwithstanding the increased prevalence of segment disclosure in firms’ annual reports, there is a paucity of empirical evidence on whether auditors affect the quality of these disclosures. This study attempts to fill this void in the audit literature by examining the impact of auditor characteristics on the quality of financial reporting at the segment’s level. We find that segment disclosure quality increases with auditor size and auditor expertise. We only find significant impact of tenure when the sample is split at the 5-year mark, with tenure less than 5 years leading to higher segment disclosure quality and tenure greater than 5 years leading to lower segment disclosure quality. In additional tests, we find that the impact of auditor’s attributes in enhancing segment disclosure quality decreases earnings management attributable to diversification and increases the excess value of diversification.