The effect of audit fees on disclosure quality in Jordan

Figures & data

Table 1. Description of the main variables used in the paper

Variable	Description ^a
DVit	Dummy variable equal to 1 if firmi has any disclosure violations at timet, otherwise zero.
AuditSit	Dummy variable equal to 1 if firmi is audited by one of the Big Four audit firms at timet, otherwise zero.
Feesit	Ratio of the total audit fees of firmi at time t to total assets
AuditRit	Dummy variable equal to 1 if firmi obtains an unqualified (clean) audit report at timet, otherwise zero.
FirmSizeit	Logarithm of the total assets of firm i at time t
Comp it	Inventory of firmi at timet divided by the total assets of firmi at timet
ROA it	Return on assets ratio of firmi at time t
Age it	Period between listing date of firmi on the Amman stock exchange and the date of observation at timet (firm age).
Levageit	Ratio of the total debt of firmi at timet to total equity. Total debt comprises short and long-term debts.

^a.The measurement and definition of variables are consistent with the existing literature.

Table 2. Tests for normality of the regression residuals ^c

Shapiro-Wilk test ^a		Shapiro-Francia test ^b
Statistic	Sig. (Prob>z)	Statistic	Sig. (Prob>z)
0.91153	0.0000	0.91290	0.0000

^aThe null hypothesis for the Shapiro-Wilk test is that the residuals are normally distributed (Royston, 1982).

^bThe null hypothesis for the Shapiro-Francia test is that the residuals are normally distributed (Royston, 1982).

^CStatistical figures were retrieved via Stata 13.

Table 3. Descriptive statistics and correlations ^A

Variable	MEAN	S.D.	DV	Fees	AuditS	AuditR	ROA	Leverage	Age	Comp
DV	0.35	0.48	1.000
Fees	−7.63	1.03	0.0847**	1.000
AuditS	0.36	0.48	0.0452	−0.2080***	1.000
AuditR	0.87	0.34	−0.2191***	−0.0135	0.0469	1.000
ROA	0.81	8.47	−0.1750***	−0.3730***	0.0812*	0.2848***	1.000
Leverage	0.34	0.25	0.1896***	−0.1791***	0.0654**	−0.2405***	−0.3052**	1.000
Age	17.20	10.99	0.1433***	−0.0778*	0.3358***	0.1059***	0.0132	0.1650***	1.000
Comp	0.11	0.13	0.0528	0.1866***	−0.0226	0.1148***	−0.0556*	0.0129	0.1472***	1.000

*** denotes that the p-values are lower than 1%;

** denotes that the p-values are lower than 5%; * denotes that the p-values are lower than 10%.

* Statistical figures were retrieved via Stata 13.

Table 4. Logistic regression estimates of the probability of disclosure violation ^b

Variable	Odd Ratio	S.E.	P-value
Fees	0.242	(0.111)^a	0.031
AuditS	0.069	(0.212)	0.745
AuditR	−1.107	(0.280)	0.000
ROA	−0.008	(0.012)	0.500
Leverage	1.392	(0.447)	0.002
Age	0.024	(0.010)	0.016
Comp	0.955	(0.813)	0.240
Year Dummy	Yes
Constant	1.408	(0.882)	0.101
No. of Firms	115
No. of Obs	919
Chi2(14)	54.09		0.000

^aStandard errors are reported in parentheses.

^bStatistical figures were retrieved via Stata 13.

Royston, J. P. (1982). An extension of Shapiro and Wilk’s W test for normality to large samples. Applied Statistics, 31(2), 115–124. https://doi.org/10.2307/2347973

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