Halim, S., Haque, F., Alam, M.S. and Puwanenthiren, P. 2026. Managerial tone and audit outcomes: Do information environment and governance monitoring matter? Journal of International Accounting, Auditing and Taxation. 61 100786. https://doi.org/10.1016/j.intaccaudtax.2026.100786
| Title | Managerial tone and audit outcomes: Do information environment and governance monitoring matter? |
|---|---|
| Type | Journal article |
| Authors | Halim, S., Haque, F., Alam, M.S. and Puwanenthiren, P. |
| Abstract | This study examines the relationship between managerial tone and audit outcomes. We employ 42,250 firm-year observations from United States non-financial firms from 2000 through 2020. Our results show that firms with a more positive managerial tone in their 10-K filings tend to experience more favorable audit outcomes. This is evidenced by fewer financial restatements, fewer adverse opinions on the strength of internal controls, lower audit fees, less audit effort, and fewer going concern opinions. We also find that such favorable impacts are more pronounced in financially non-distressed firms, thereby reinforcing the credibility of the positive managerial tone as perceived by auditors. Our main findings are robust across various sensitivity tests and alternative variable approaches. Our analysis also suggests that the relationship between managerial tone and audit outcomes is more pronounced for firms with a poorer quality information environment and weaker governance monitoring. Finally, our findings suggest that a positive managerial tone is negatively associated with both earnings management and the likelihood of whistleblowing, which in turn have a positive influence on audit outcomes. Overall, our study contributes to the literature and practice by demonstrating the significant role that client-firm managerial tone plays in audit outcomes. |
| Article number | 100786 |
| Journal | Journal of International Accounting, Auditing and Taxation |
| Journal citation | 61 |
| ISSN | 1879-1603 |
| 1061-9518 | |
| Year | 2026 |
| Publisher | Elsevier |
| Publisher's version | License CC BY 4.0 File Access Level Open (open metadata and files) |
| Digital Object Identifier (DOI) | https://doi.org/10.1016/j.intaccaudtax.2026.100786 |
| Publication dates | |
| Published online | 30 May 2026 |
| Published in print | Dec 2026 |