CEO succession origin, audit report lag, and audit fees: Evidence from Iran

This study examines whether chief executive officer (CEO) succession origin (hiring an insider CEO versus an outsider CEO) is associated with audit report lag (ARL) and audit fees in the Iranian setting, which is characterized by less-developed corporate governance mechanisms and a constrained audit market. Using a sample of firms listed on the Tehran Stock Exchange between 2007 and 2017 and three proxies for ARL, I find that audit report delay is longer if the CEO is promoted from within the firm. Furthermore, audit fees are higher for firms promoting an insider to the CEO position than for firms hiring outsider CEOs. Further analyses show that the positive effects of insider CEOs on ARL and audit fees are more pronounced when firms are audited by private audit firms. The results remain robust after controlling for firm-level fixed effects, addressing endogeneity issue, and running several sensitivity tests. This study contributes to the literature by providing new empirical evidence concerning the effect of CEO succession origin on corporate audit outcomes in an emerging economy setting. The findings of this study suggest that the implications of CEO succession origin for auditors can differ between emerging and developed economies. (C) 2021 Elsevier Inc. All rights reserved.