Political connections, political corruption and auditing: a literature review

Published date10 June 2021
Date10 June 2021
Subject MatterAccounting & finance,Financial risk/company failure,Financial crime
AuthorImen Khelil,Hichem Khlif,Ines Amara
Political connections, political
corruption and auditing:
a literature review
Imen Khelil
Prince Sultan University, Riyadh, Saudi Arabia
Hichem Khlif
Faculty of Economics and Management of Sfax, University of Sfax,
Sfax, Tunisia, and
Ines Amara
Department of Accounting, School of Business, King Faisal University,
Al Ahsa, Saudi Arabia
Purpose Given the interest in better understanding the economic effects of political connections and
political corruption on auditor behavior, this paper aims to review empirical studies in the accounting and
nance domaindealing with these topics.
Design/methodology/approach Keywords used to search for relevant studies include political
connections or politicalcorruptionwith audit fees, audit report lag, audit independenceand audit opinion.
This paper consultsseveral editorial sources including Elsevier,Electronic Journals Service Elton B. Stephens
Company, Emerald, Springer, Palgrave Macmillan, Sage, Taylor and Francis and Wiley-Blackwell. The
search yields16 published studies since 2006.
Findings The review reveals that the majority of studies dealing with the economic effect of political
connections are conducted in an Asian setting. Political connections increase the likelihood of receiving a
favorable auditopinion and they are associated with higher audit fees longer auditdelays. However, they can
compromise auditorindependence. Studies dealing with the economic consequences of politicalcorruption on
auditing are mostly based in the US setting. The ndings of the reviewed studies suggest that political
corruption is associatedwith higher audit fees, longer audit delays and increases the likelihoodof receiving a
going concernaudit opinion.
Practical implications The synthesis suggests that political connections can adversely
(compromise auditor independence) or benecially (reduce the likelihood of issu ing a going concern
audit opinion) impact auditor behavior depending on the legal, institutional and cultural characteristics
prevailing in a particular setting. Political corruptionsincrease audit assessed risks leading to a higher
probability of issuing a going concern audit opinion and increased audit effort (audit fees and audit
delays). It should be noted here that the literature linked to political corruption and auditor behavi ori s
still in its infancy and much remains to be learnt if this stream of researchis examined outside the US
Originality/value The review discusses the political connections and political corruption literature
specicallydevoted to auditor behavior. It identies some limitationsof this literature and offers guidance for
future researchavenues.
Keywords Political corruption, Literature review, Auditing, Political connections
Paper type Literature review
The authors would like to thank Prince Sultan University for their support.
Journalof Financial Crime
Vol.29 No. 1, 2022
pp. 159-170
© Emerald Publishing Limited
DOI 10.1108/JFC-12-2020-0257
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