Audit regulatory reform with a refined stakeholder model to enhance corporate governance: Hong Kong evidence

Abstract

Purpose – Recent corporate scandals have resulted in a greater focus on business ethics and governance. The purpose of this study is to examine whether the existing audit regulatory framework adequately serves the legitimate interests of stakeholders.Design/methodology/approach – This study is the first to collect survey data on audit regulatory issues in the post‐Lehman Brothers environment. In total, 190 responses to a mail survey were collected from Big Four auditors and from 166 CEOs. Stakeholder theory is used to analyse these responses.Findings – The results indicate that Big Four auditors and CEOs perceive the disclosure of post‐audit report event evidence to be important in discharging their ethical obligations. Both groups agreed that issuing timely audit reports is important, and that “introducing quarterly audit reporting” is a necessary step to enhance corporate governance. A risk‐based auditing approach necessitates the introduction of quarterly reporting. The findings support the notion unde...