Professional Auditing Research

Professional Auditing Research

Deviation from Optimal Corporate Social Responsibility and Audit Fees: Examining the Mediating Role of CEO Turnover

Document Type : Original Article

Authors
Mushtaq Talib Sabr 1
Pari Chalaki 2
1 PhD student, Department of Accounting, Faculty of Management and Economics, Urmia University, Urmia, Iran.
2 Assistant Professor, Department of Accounting, Faculty of Management and Economics, Urmia University, Urmia, Iran
10.22034/jpar.2025.2066190.1441
Abstract
Deviation from the optimal level of corporate social responsibility (CSR) can lead to informational and operational risks and, by increasing financial and managerial complexities, raise agency costs as well. In this context, CEO turnover—as a consequence of suboptimal CSR behavior—may affect auditors perceived risk and, consequently, increase audit fees. The present study aims to examine the impact of CSR deviation on audit fees, emphasizing the mediating role of CEO turnover. This quantitative, descriptive-correlational research analyzes data from 148 firms listed on the Tehran Stock Exchange over the period 2013 to 2023. Multiple regression and logistic regression analyses were used to test the hypotheses. The results show that deviation from the optimal CSR level increases audit fees and the likelihood of CEO turnover. However, the mediating role of CEO turnover was not supported. This outcome likely stems from structural weaknesses in CSR disclosure and insufficient reporting standards among Iranian firms, resulting in a lack of transparent information on the effect of managerial changes on the audit process for auditors. Therefore, auditors primarily focus on operational risks and the quality of financial reporting. The study highlights the need for balance in CSR activities as a key factor in reducing risk and agency costs, and recommends that managers, auditors, and investors consider this issue in their decision-making processes.
Keywords
Audit Fees
Deviation from Optimal Corporate Social Responsibility
CEO Turnover

Subjects

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