scholarly journals Non-Executive Chairman, Audit Quality and Earnings Management

2020 ◽  
Vol 15 (3) ◽  
pp. 50
Author(s):  
Aditi Shams
Keyword(s):  
Earnings Management ◽  
Executive Director ◽  
Audit Quality ◽  
Earnings Quality ◽  
Governance Mechanism ◽  
Jones Model ◽  
Corporate Governance Mechanism ◽  
Total Accrual

The purpose of this paper is twofold, first, it examines the association of non-executive chairman and the quality of financial earnings and second, it examines the role of audit quality and non-executive chairman in earnings quality. This paper uses the modified jones model and the performance adjusted modified Jones model considering two cash flow methods of total accrual and perform regression analysis on the energy sector firms from the year 2010-2012. The study result does not find any significant association of earnings management and non-executive director and audit quality in the Australian context. This finding raises concerns regarding the effectiveness of such a corporate governance mechanism to maximize monitoring over the operation of the firm.

scholarly journals KUALITAS LABA ATAS INTENSITAS KECURANGAN AKUNTANSI DAN MANAJEMEN LABA AKRUAL TERHADAP AGRESIVITAS PAJAK

2020 ◽  
Vol 5 (2) ◽  
pp. 199-208
Author(s):  
Rahmat Irawan ◽  
Syahril Djaddang
Keyword(s):  
Earnings Management ◽  
Structural Equation ◽  
Audit Quality ◽  
Earnings Quality ◽  
Equation Model ◽  
Test Results ◽  
Accounting Fraud ◽  
Tax Aggressiveness ◽  
The Relationship

This study aims to examine the effect of accounting fraud intensity and accrual earnings management on tax aggressiveness and test earnings quality and audit quality on the accounting fraud intensity and accrual earnings management on tax aggressiveness. The testing method in this study uses multiple regression analysis. Through purposive sampling, the sample in this study amounted to 65. The data testing used structural equation model. The test results show that the intensity of accounting fraud affects tax aggressiveness, Accrual earnings management affects the tax aggressiveness, The quality of earnings strengthens the effect of accounting fraud and accrual earnings management on tax aggressiveness and Audit quality does not moderate the relationship between accounting fraud intensity and accrual earnings management with tax aggressiveness.

Discussion of the Quality of Accruals and Earnings: The Role of Accrual Estimation Errors

2002 ◽  
Vol 77 (s-1) ◽  
pp. 61-69 ◽  
Author(s):  
Maureen F. McNichols
Keyword(s):  
Measurement Error ◽  
Earnings Management ◽  
Earnings Quality ◽  
Discretionary Accruals ◽  
Cash Flows ◽  
Future Research ◽  
Estimation Errors ◽  
Empirical Estimates

Dechow and Dichev (2002) model earnings quality as the magnitude of estimation errors in accruals, and provide empirical estimates of this construct based on the relation between accruals and cash flows. I characterize the innovation and limitations in this approach, and provide empirical evidence of measurement error in their empirical specification. I also adapt their model to assess the specification of the Jones' (1991) model and document that this model provides estimates of discretionary accruals that are significantly associated with cash flows, which are likely to be substantially nondiscretionary. I conclude with suggestions for future research on earnings quality and earnings management.

Earnings Quality of Foreign versus U.S. Reverse Mergers: Geographical Location or Firm-Level Incentives?

2015 ◽  
Vol 15 (1) ◽  
pp. 49-66 ◽  
Author(s):  
Chu Chen ◽  
Giorgio Gotti ◽  
Don Herrmann ◽  
Kathryn Schumann
Keyword(s):  
Earnings Management ◽  
Audit Quality ◽  
Earnings Quality ◽  
Geographical Location ◽  
Firm Level ◽  
Business Press ◽  
Reverse Mergers ◽  
Big 4 ◽  
Reverse Merger

ABSTRACT We test whether geographical location, audit quality, and equity offering play a role in the earnings quality of reverse merger (RM) firms. We provide evidence that, contrary to the popular focus on foreign reverse mergers by the business press, earnings management is equally likely in both U.S. and foreign RM companies. We find that firm characteristics are more indicative of the likelihood to manage earnings than geographical location. The presence of a Big 4 auditor for RM firms is associated with higher earnings quality and a survival rate almost twice as high in comparison to RM firms audited by a non-Big 4 auditor. Moreover, we find that while earnings management is a common practice at all RM firms, it is especially pervasive for RM firms that are issuing new equity after the reverse merger.

scholarly journals An empirical analysis of the effect of audit quality on financial reporting fraud

2012 ◽  
Vol 9 (4-4) ◽  
pp. 391-399
Author(s):  
Fujen Daniel Hsiao ◽  
Jerry W. Lin ◽  
Joon S. Yang
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Audit Quality ◽  
Reporting Quality ◽  
Auditor Independence ◽  
External Auditors ◽  
The Relationship ◽  
Financial Reporting Fraud

Several highly publicized financial reporting fraud cases (e.g., Enron, Tyco International, and WorldCom) have put the role of external auditors and quality of their audit in ensuring corporate financial reporting quality under considerable scrutiny. Much research has been conducted on the determinants of earnings management. Since earnings management is inherently unobservable, most studies use various measures of accruals as proxies for earnings management. This study examines the relationship between audit quality and a more direct measure of earnings management – financial reporting fraud. Contrary to the concerns that nonaudit services are the primary reason for auditor independence impairment that results in lower audit and earnings quality, this study finds no significant relationship between reporting fraud and fees paid to auditors for various services.

scholarly journals Methodological Analysis of Accounting Quality : Empirical Approach to DeAngelo’s Model and the Modified Jones Model

2021 ◽  
Vol 66 (2) ◽  
pp. 195-210
Author(s):  
Ervin Denich
Keyword(s):  
Decision Making ◽  
Earnings Management ◽  
Earnings Quality ◽  
Financial Statements ◽  
Empirical Approach ◽  
Accounting Quality ◽  
Manufacturing Companies ◽  
Jones Model ◽  
A Company

The aim of this study is twofold: the first goal is to systemise and summarise the models designed to measure the quality of financial statements, as these reports can form the basis of decision-making for the users. The second goal is to analyse the financial statements prepared by manufacturing companies acting in Baranya Country, from a quality perspective, applying the DeAngelo (1986) model and the modified Jones model (1995). Earnings quality is measured by the change in total accruals divided by total assets, considering a 4-years period of time between 2016 and 2019. Calculating the T-statistic, the amount of total accruals is a negative figure in the covered period. Consequently, it might suggest that managers make some decisions, which have a decreasing impact on earnings level of a company. Although the results of this study show some evidence of earnings management, further investigation is required in order to provide a more confident conclusion.

scholarly journals DIVIDEND POLICY, CORPORATE GOVERNANCE AND EARNINGS QUALITY: A CASE OF NON-FINANCIAL LISTED FIRMS OF PAKISTAN

2021 ◽  
Vol 9 (3) ◽  
pp. 517-530
Author(s):  
Tehmina Afzal ◽  
Atif Atique Siddiqui ◽  
Shiraz Khan ◽  
Muhammad Kamran Khan ◽  
Nader Huseen
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Firm Size ◽  
Dividend Policy ◽  
Audit Quality ◽  
Negative Impact ◽  
Earnings Quality ◽  
Earning Quality ◽  
The Impact

Purpose of the study: This research empirically examined the impact of the dividend policy and corporate governance attributes (board size, board meetings, audit quality, nomination committee, board independence, remuneration committee, and CEO duality) on earnings quality (EQ) of the firms in Pakistan. Methodology: The study used secondary data of 148 non-financial listed companies of the Pakistan Stock Exchange (PSX) with 1450 firm-year observations over 10 years from 2010 to 2019. Earning quality was assessed by the earnings management, while the values of the discretionary accruals were used to measure earnings management by employing the Modified jones model (1995). Panel regression analysis examined the impact of independent variables (dividend policy & characteristics of CG) on the dependent variable (EQ). Main Findings: Results revealed that the dividend policy showed no significant impact on earnings quality. Also, the results indicated that the audit quality and remuneration committee have a significant negative impact on earning management and a positive impact on earning quality. However, the results illustrate that the large board size, board meetings, CEO duality, firm size, and leverage have a positive influence on earnings management and a negative impact on earnings quality. Overall the study found that the corporate governance characteristics, firm size, and leverage influence the earnings quality of the firms in Pakistan. Applications of this study: The empirical results of the study will help to improve the understanding of dividend policy & corporate governance attributes in relationship with the EQ. Second, as dividend is considered one of the most important factors influencing investment decisions, so this endeavour will clarify to the investors and regulators that whether dividend will predict the quality of earnings in Pakistani firms. Novelty/Originality of this study: This study extends the literature of earnings quality that is very thin in Pakistan.

scholarly journals Kualitas Laba: Implikasi dari Pengaruh Tenure Terhadap Kualitas Audit

2017 ◽  
Vol 17 (1) ◽  
pp. 61-76
Author(s):  
Rini Indriani ◽  
Apteerizko Dwi Kusumaputra
Keyword(s):  
Earnings Management ◽  
Audit Quality ◽  
Earnings Quality ◽  
Quality Measure ◽  
Direct Influence ◽  
Quality Audit ◽  
A Company ◽  
Intervening Variables ◽  
Simultaneous Influence

This study aims to determine whether the effect of tenure on earnings quality with quality audits are used as intervening variables. The existence of inconsistencies in the results of previous studies on the effect of tenure on audit quality such as Myers et al (2003), Manry et al (2008), Carey and Simnett (2006), Wibowo and Rossieta (2009) led to re-examined this issue to see the effect of tenure on audit quality. In addition, this study also looked at the effects of indirect and direct influence of tenure on earnings quality and tenure through a quality audit of the quality of earnings that will be the test whether the simultaneous influence. Tenure in this study are calculated by looking at how many years the KAP to audit a company, while the audit quality measure using current accruals and earnings quality measure using earnings management. Observational data in this study is a manufacturing company of the year 2006-2010 in accordance with predetermined criteria. The results of this study indicate that significant tenure was positively related to audit quality, tenure can be affected indirectly through a quality audit of the quality of earnings, and tenure through the quality audit can simultaneously affect the quality of earnings.Keywords: Tenure, Quality Audit, Quality of Earnings

Corporate Governance Mechanism, Audit Quality and Accrual Quality (Indonesia Manufacturing Company Evidance)

2012 ◽  
Vol 3 (1) ◽  
Author(s):  
Aloysius Harry Mukti ◽  
Ratna Wardhani
Keyword(s):  
Corporate Governance ◽  
Audit Committee ◽  
Audit Quality ◽  
Governance Mechanism ◽  
Manufacturing Companies ◽  
Accrual Quality ◽  
Big 4 ◽  
Audit Fee ◽  
Corporate Governance Mechanism

Abstract – This study examines the influence of implementation of corporate governance mechanism and audit quality toward accrual quality of the corporation. The implementation of corporate governance mechanism uses three measures: the effectiveness of the audit committee, board effectiveness and family ownership structure. For audit quality the measurements uses two approaches: amount of audit fee and grouping the company into two groups (audited by the auditor big-4 and audited by auditor non big-4). The study was conducted among selected manufacturing companies in Indonesia, during the period 2007-2009. Based on the results of the study, we find that only the board of Commissioners and grouping the company into two group (audited by the auditor big-4 and audited by auditor non big-4 experience) as a proxy of audit quality significantly improved quality of accrual. Keywords - Corporate governance mechanism, audit quality, accrual quality

scholarly journals Corporate governance mechanism and financial performance: role of earnings management

2020 ◽  
Vol 7 (4) ◽  
pp. 3395-3409 ◽  
Author(s):  
Enni Savitri ◽  
Andreas Andreas ◽  
Almasdi Syahza ◽  
Tatang Ary Gumanti ◽  
Nik Herda Nik Abdullah
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Financial Performance ◽  
Governance Mechanism ◽  
Corporate Governance Mechanism
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