The Role of CEO Succession Origin in Moderating the Relationship Between Internal Control Weaknesses and Perceived Audit Risk

Adil Zahid, Yusif; Chalaki, Pari; Heydari, Mehdi

doi:10.22103/jak.2026.25883.4222

The Role of CEO Succession Origin in Moderating the Relationship Between Internal Control Weaknesses and Perceived Audit Risk

Articles in Press

Document Type : Research Paper

Authors

Department of Accounting, Faculty of Economic and Management, Urmia University, Urmia, Iran.

10.22103/jak.2026.25883.4222

Abstract

Objective: This study aims to examine the effect of internal control weaknesses on auditors' perceived risk and the moderating role of CEO succession origin. Internal control deficiencies increase the likelihood of material misstatements, making the audit process more time-consuming and costly. As a result, they raise the level of risk perceived by the auditor. Additionally, the origin of CEO succession may influence the magnitude of this effect by shaping the auditor's perception of risk.

Method: This is applied research conducted with a descriptive–correlational approach. The statistical population includes all companies listed on the Tehran Stock Exchange during the period 2013–2023. After applying screening criteria, a final sample of 163 firms with 1,793 firm-year observations was selected for analysis.

Results: The statistical results indicate that internal control weaknesses have a positive and significant effect on auditors’ perceived risk. Furthermore, internal CEO succession intensifies this relationship. However, external CEO succession shows no significant effect on the relationship.

Conclusion: Weak internal controls play a key role in increasing auditor perceived risk, and this effect becomes more pronounced when the CEO is appointed from within the board of directors. In contrast, external CEO succession does not meaningfully alter auditors’ short-term risk perception, as any reduction in actual risk depends on structural reforms and substantive strengthening of the internal control system.

Keywords

Main Subjects

Financial Accounting

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The Role of CEO Succession Origin in Moderating the Relationship Between Internal Control Weaknesses and Perceived Audit Risk

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The Role of CEO Succession Origin in Moderating the Relationship Between Internal Control Weaknesses and Perceived Audit Risk

References

Articles in Press, Accepted Manuscript Available Online from 30 May 2026

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History

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Articles in Press, Accepted Manuscript
Available Online from 30 May 2026