scholarly journals THE ASSOCIATION BETWEEN AUDIT QUALITY AND EARNINGS MANAGEMENT USING CLASSIFICATION SHIFTING

2021 ◽  
Author(s):  
Eray ÇETİN ◽  
Alpaslan YAŞAR
Keyword(s):  
Earnings Management ◽  
Audit Quality ◽  
Classification Shifting

Pengaruh Hubungan Politik Terhadap Manajemen Laba Pada Perusahaan Sektor Jasa Dengan Variabel Kontrol Ukuran Perusahaan Dan Kualitas Audit

2018 ◽  
Vol 16 (2) ◽  
pp. 30
Author(s):  
Dwikky Darmawan ◽  
Weny Putri
Keyword(s):  
Earnings Management ◽  
Firm Size ◽  
Significant Influence ◽  
Service Sector ◽  
Audit Quality ◽  
Stock Exchange ◽  
Secondary Data ◽  
Annual Reports ◽  
Political Connection ◽  
Discretionary Accrual

The purpose of this study is to determine the effects of political connection toward the earnings management of service sector companies with control variables firm size and audit quality. Firm�s political connection measured by using dummy variable. Earnings management is proxied by discretionary accrual which is measured by using Modified Jones Model. The research data applied in this study are the secondary data which are taken from the annual reports of service sector companies that listed in Indonesian Stock Exchange of 2016-2017 periods. There are 330 observations fit as sample, which are taken by using purposive sampling method. Data are processed by applying the multiple linear regression test. The result show that the political connection had positive but not significant influence to earnings management. Firm size had negative but not significant influence to earnings management. Whereas the audit quality had a negative and significant influence to earnings management.

Fee Discounting and Audit Quality Following Audit Firm and Audit Partner Changes: Chinese Evidence

2014 ◽  
Vol 90 (4) ◽  
pp. 1517-1546 ◽  
Author(s):  
Hua-Wei Huang ◽  
K Raghunandan ◽  
Ting-Chiao Huang ◽  
Jeng-Ren Chiou
Keyword(s):  
Earnings Management ◽  
Audit Quality ◽  
Audit Fees ◽  
Audit Firm ◽  
Audit Fee ◽  
Significant Attention

ABSTRACT Issues related to low-balling of initial year audit fees and the resultant impact on audit quality have received significant attention from regulators in many countries. Using 9,684 observations from China during the years 2002–2011, we find that there is a significant initial year audit fee discount following an audit firm change when both of the signing audit partners are different from the prior year. The evidence is mixed if one or both of the signing partners from the prior year also moves with the client to the new audit firm. We find evidence of audit fee discounting in our analysis of fee levels, but not in our analysis of changes in audit fees from the prior year. Sanctions for problem audits and greater earnings management are more likely when there is an audit firm change that involves two new signing partners together with initial year audit fee discounting.

The Effect of the Private Securities Litigation Reform Act of 1995 on Accounting Discretion of Client Managers of Big 6 and Non-Big 6 Auditors

2003 ◽  
Vol 22 (1) ◽  
pp. 93-108 ◽  
Author(s):  
Ho Young Lee ◽  
Vivek Mande
Keyword(s):  
Earnings Management ◽  
Potential Benefit ◽  
Audit Quality ◽  
Discretionary Accruals ◽  
Securities Litigation ◽  
Investor Confidence ◽  
Joint And Several Liability ◽  
Before And After ◽  
Deep Pockets

This study examines how the Private Securities Litigation Reform Act of 1995 (PSLRA) affects auditors' incentives to curtail earnings management by client managers. The most significant reform of PSLRA was the elimination of joint and several liability under which auditors and other parties could be named to lawsuits because of ‘deep pockets’ rather than culpability. While the elimination of joint and several liability provides significant relief to auditors from litigation, opponents of PSLRA argue that it discourages meritorious lawsuits and lowers audit quality, reducing investor confidence in markets. The potential benefit would be greatest for Big 6 firms, who have the highest exposure (largest clients) and significant resources to pay damages. In this paper we argue that if PSLRA induces decreases in audit quality, then we should expect increases in the prevalence of accruals after this Act. To investigate this issue we examine the discretionary accruals of a sample of 2,600 companies three years before and after the act. Our results support this hypothesis. Specifically, we find that after PSLRA income-increasing discretionary accruals rise for auditees of Big 6 firms but not for auditees of non-Big 6 firms.

Earnings management and ownership structure in emerging market

2017 ◽  
Vol 43 (10) ◽  
pp. 1117-1136 ◽  
Author(s):  
Naima Lassoued ◽  
Mouna Ben Rejeb Attia ◽  
Houda Sassi
Keyword(s):  
Emerging Markets ◽  
Earnings Management ◽  
Ownership Structure ◽  
Audit Quality ◽  
Emerging Market ◽  
Middle Eastern ◽  
Convincing Evidence ◽  
Loan Loss ◽  
African Countries ◽  
Content Type

Purpose The purpose of this paper is to investigate whether ownership structure affects earnings management in the banking industry of emerging markets. Design/methodology/approach The empirical study is conducted using a sample of 134 banks from 12 Middle Eastern and North African countries. Econometrically speaking, the study used a panel data regression analysis. Findings The authors found convincing evidence that banks with more concentrated ownership use discretionary loan loss provisions to manage their earnings. The authors also found that state and institutional owners encourage earnings management, while family owners reduce this practice. Practical implications The findings would be valuable for investors since they should take into account ownership structure in order to reach a better investment decision. Moreover, regulatory reforms in emerging markets should push for more transparency about ownership structure, high levels of supervision, and external audit quality. Originality/value This study presents international evidence on the prominent role of owners in earnings management in emerging markets with weak shareholder rights protection.

Does Mandatory IFRS Adoption Affect Audit Hours and the Effectiveness to Constrain Earnings Management? Evidence from Italy

2021 ◽  
Author(s):  
Stefano Azzali ◽  
Tatiana Mazza ◽  
Kenneth J. Reichelt ◽  
Dechun Wang
Keyword(s):  
Earnings Management ◽  
Empirical Analysis ◽  
Audit Quality ◽  
Ifrs Adoption ◽  
Hourly Rate ◽  
Prior Literature ◽  
Abnormal Accruals

We examine the effect IFRS adoption has had on audit effort and the effectiveness of greater audit effort on constraining earnings management. While prior studies have examined the costs of IFRS adoption, it is unclear whether IFRS adoption affects audit effort and whether extra audit effort results in higher audit quality. We find that following Italy's adoption of IFRS, audit hours (but not the hourly rate) increased, suggesting that audit effort (in audit hours) increased following IFRS adoption. We then examine whether more audit hours are associated with improved audit quality in the IFRS regime. Consistent with prior literature (Caramanis and Lennox 2008), we find that more audit effort is associated with lower abnormal accruals in the period before IFRS adoption. Interestingly, after Italy adopted IFRS, abnormal accruals are lower, but audit hours were less associated with lower abnormal accruals, implying that more audit hours are needed to constrain earnings management. Collectively, our empirical analysis suggests that while audit effort increased with mandatory IFRS adoption, the effectiveness of audit effort to constrain earnings management decreased.

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