Islamic Religious Atmosphere and Audit Pricing: Evidence from Iran

Business Ethics, the Environment and Responsibility, Doi: 10.1111/beer.12364, January 2021

Posted: 14 Jul 2021

See all articles by Mehdi Khodakarami

Mehdi Khodakarami

University of Tehran

Zabihollah Rezaee

University of Memphis - School of Accountancy

Reza Hesarzadeh

Ferdowsi University of Mashhad

Date Written: June 30, 2021

Abstract

This study examines whether the Islamic religious atmosphere of local communities influences audit pricing. We use a comprehensive survey conducted by Iran’s Ministry of Culture and Islamic Guidance to measure the Islamic religious atmosphere. Using a sample of 1,204 observations from firms listed in Iran’s capital market, we find that firms located in regions with a strong Islamic religious atmosphere pay significantly lower audit fees. Furthermore, the study reveals that family ownership (auditor size) strengthens (weakens) the aforementioned relationship. However, we did not find a significant moderating role for the local community’s social capital. We contribute to the ethics literature by providing a better understanding of the economic consequences of the religious atmosphere and offering policy, practical, and educational implications.

Keywords: Religious atmosphere, Audit fees, Audit risk, Agency costs, Islam, Family firms

JEL Classification: M14, M42, M48

Suggested Citation

Khodakarami, Mehdi and Rezaee, Zabihollah and Hesarzadeh, Reza, Islamic Religious Atmosphere and Audit Pricing: Evidence from Iran (June 30, 2021). Business Ethics, the Environment and Responsibility, Doi: 10.1111/beer.12364, January 2021 , Available at SSRN: https://ssrn.com/abstract=3874934

Mehdi Khodakarami

University of Tehran ( email )

16th Azar St., Enghelab Sq
Tehran, UT 1417466191
Iran

Zabihollah Rezaee

University of Memphis - School of Accountancy ( email )

Fogelman College of Business and Economics
Memphis, TN 38152-6460
United States
901-678-4652 (Phone)

Reza Hesarzadeh (Contact Author)

Ferdowsi University of Mashhad ( email )

Mashhad, 9177948974
Iran

HOME PAGE: http://Hesarzadeh.profcms.um.ac.ir/

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
172
PlumX Metrics