The Impact of The Audit Quality On That of The Earnings Management: Case Study In Tunisia (original) (raw)
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The Impact of Quality Audit on the Management of Earnings
Corporate Ownership and Control, 2015
In a Tunisian context, the purpose of this research is to study the aspects related to the quality of external audit, relating to the opportunistic management of earnings. Indeed, we are interested in the aspect of handling the earnings as a means for the manager to achieve its objectives by publishing a result different from that which is achieved. Thus, the quality of external audit, as an essential element of the system of government of the companies, may be able to limit the process of accounting manipulation, and therefore to protect the interests of investors and creditors. Given these factors, there is a key question: To what extent can the quality of the external audit influence the opportunistic management of earnings in Tunisian businesses? In this research, our goal is to empirically test a sample of Tunisian companies listed on the stock market, the impact of audit quality on the opportunistic practice of earnings
2013
This research is going to study the effect of auditing quality on earnings management in firms accepted in Tehran Stock Exchange. Three criteria of: audit firm size, industry specialization and auditor's tenure were used to measure auditing quality. Also Jones's adjusted model has been used to calculate earnings management. 73 companies during the time period between 2008 and 2010 were investigated. To test the hypotheses we used linear regression model and difference test and the effects of variables were investigated separately because the overall model test created some co-linearity problems. The findings of the present research show that the results of the annual data and the interim data have been the same and this shows that auditing firm size does not affect earnings management meaningfully but industry specialization and auditor's tenure have had a negative effect on earnings management. Also earnings management in firms audited by big auditors, industry speciali...
International Journal of Business and Emerging Markets, 2015
Keywords: External audit quality Ownership structure Discretionary accruals Cross effect a b s t r a c t This article emphasizes the significance of researching the cross effect of using jointly external audit quality and ownership structure over managerial discretion in a largely unexplored, non-Western and emerging context. The analysis is based on a sample of 61 Tunisian firms listed and unlisted on the Tunis Stock Exchange and operating in the industrial and commercial sectors during the period 2007-2011. To provide evidence on this topic, we conduct an empirical examination. First, we examine the effect of external audit quality and ownership structure on the discretionary accruals for the whole sample. We find that only auditor reputation has a negative and significant effect on earnings management. Second, this article provides empirical evidence on the cross effect of external audit quality variables and capital concentration on earnings management. This test suggests that this combination has a negative and significant effect on earnings management in industrial firms but it has a positive and non significant effect in commercial firms. Finally, the third empirical test concerns the combined effect of external audit quality and institutional property on earnings management. We find that the cross effect of this combined relation is negatively and significantly associated with earnings management of industrial firms but it has no significant effect on the earnings management of commercial firms. As for the cross effect of the auditor seniority and the institutional property, it has a positive and a significant effect in the commercial sectors, while, it is positively and non-significantly associated with earnings management of industrial firms.
Academic Journal of Accounting and Economic Researches, 2017
Accounting profession researchers and practitioners consider earnings as one of the most important criteria for evaluating the performance and determining the value of the company, and they are forced to evaluate the reported earnings by economic units. To assess the earning a concept called quality of earnings is used. This study seeks to investigate the impact of certain factors, including the audit characteristics (size of audit firm, switch of auditors and auditor opinion) on the quality of earnings through the variable of discretionary accruals. In addition, other factors such as control variables of operating leverage, profitability, firm size, and the operational risk were examined. Thus the sample data consisted of 130 participants were collected for a five year period (2008-2013) and using model explanation, three proposed hypotheses in this study were tested. Regression analysis was used to test the hypotheses. The results indicate a significant negative correlation between the size of audit institution and discretionary accruals. This means that there is a negative and significant relationship between the variable of the audit institution size and earnings quality. Also, there is a non-significant positive relationship between the variables of the type of auditor opinion and discretionary accruals. This indicates a non-significant positive relationship between the variables of the type of auditor opinion and earnings quality. Finally, there is a negative and non-significant correlation between the variable of the switch of audit and the index of discretionary accruals. This represents a negative and non-significant relationship between the switch of auditor and earnings quality variables.
Journal of infrastructure, policy and development, 2023
The present study investigates the relationship between audit quality and earnings management in banks listed on the Stock Exchange of Iraq and Oman. This paper used audit firm size, auditors' industry expertise, audit report timeliness, auditor change, and auditors' opinions to measure audit quality. Financial statements, notes attached to financial statements, and reports of independent auditors of 28 banks listed on the Iraqi Stock Exchange and 8 banks listed on the Oman Stock Exchange during the financial period of 7 years (2015 to 2021), and hypotheses were tested using EViews software and panel data. The results of the hypothesis testing showed no significant relationship between the firm size and the auditors' change and earnings management for both countries (Iraq and Oman). This is while the relationship between the auditor's industry expertise, the timely presentation of the audit report, and the auditor's opinion and earnings management for both countries (Iraq and Oman) is negative.
Critical Perspectives on Accounting Audit Quality and Earnings Management
The specific focus of the study was to investigate the relationship between audit firm tenure and audit quality; assess the effect of audit committee on audit quality; and examine the relationship between audit quality and earnings management. This research work is hinged on agency and stakeholders' theories. The data for this study were collected from the financial statements of the companies studied, journal articles, reports, periodicals, websites and magazines. The research study nine (9) oil and gas companies and covered a 20 (2000-2019) year period. The study adopted Ordinary Least Square method of data analysis to analyse the data collected and decisions were made from the statistical result. This study concludes that there is significant negative relationship between audit quality and audit committee meetings; that significant positive relationship exists between audit quality (AUQTY) and firm age (AGE); that there is significant positive relationship between audit firm tenure and audit quality; that there is significant positive relationship between board size and audit quality; that there is a statistical significant negative relationship between firm size and audit quality; that there is significant negative relationship between financial literacy of audit committee members and audit quality; that there is significant negative relationship between audit fee (FEE) and audit quality (AUQTY); that there is significant negative relationship between earnings management (EMGT) and audit quality (AUQTY). Since there is negative relationship between audit committee's meeting and audit quality, firms should find a better way to monitor statutory audit rather than increasing meetings of audit committee.
Corporate Governance and Accounting Earnings Management: The Case of Tunisia
International Journal of Accounting and Financial Reporting
This paper aims to test the impact of some corporate governance characteristics on the management of the accounting earnings measured by discretionary accruals. As for the prior research we treat the level of management of accounting earnings as a "proxy" for the quality of the accounting and financial information published by companies. Empirical analysis is based on the modified Jones model (1995) to estimate discretionary accruals and a panel data model applied to a sample of 21 companies listed on the Tunis Stock Exchange (BVMT) over a period of 3 years from 2008 to 2010. The main findings of the current study reveal that, in the Tunisian context, the affiliation of auditors to a "Big" international network and the independence of the board of directors significantly constrain the practice of managing the accounting earnings and, consequently, they improve the quality of the published result. However, the number of independent members in the audit committee h...
The Effect of Audit Quality on the Earnings Management Activities
2012
The main purpose of this study was to investigate the effect of audit quality, measured by average clients' size of auditing firm, on the earnings management activities, measured by the value of discretionary accruals. This study was done controlling two moderating variables, which are the client importance and auditor’s name. Simple and Multiple Regressions were used to study the effects of audit quality on earnings management, and ANOVA was used for comparing the effects of auditor's name on the relation between audit quality and earnings management. The findings of the study indicated that audit quality has a relatively weak negative influence on discretionary accruals, and this, in turn, has a relatively weak negative influence on the manipulations done by management. The moderating variable client importance has no significant effect on the relationship between audit quality and discretionary accruals. So auditor’s name is the moderating variable. The researchers recomm...
Audit Quality and Earnings Management: Evidence from Turkey
Uluslararası İktisadi ve İdari İncelemeler Dergisi, 2019
Earnings management is one of the controversial issues in the current business environment. The value relevance of earnings is adversely influenced by earnings management. The objective of this study is to analyze the association between audit quality and earnings management for non-financial firms quoted on Borsa Istanbul. Ordinary least square regression analysis is employed in this study in analyzing the association between earnings management and audit quality. Three different proxies for audit quality (auditor independence, audit industry specialization and auditor tenure) were analyzed based on a sample of 97 nonfinancial firms quoted on Borsa Istanbul from 2013 to 2018. Empirical analysis indicates that auditor independence and audit industry specialization are significantly negatively related with likelihood of earnings management and long-term auditor and client relationship enables the management of firms to more actively engage in earnings management. This paper finds support for the notion that the high-quality audit is one of the prominent factors that can mitigate earnings management practices.
SSRN Electronic Journal, 2013
Malaysian public listed companies will attempt to portray a positive outlook of business in order to provide confidence to shareholders and investors regarding the profitability and viability of the company. A key method used by the management to manage earnings and show better performance is through accrual accounting. This method of earnings management is not legally prohibited and is based main ly on the co mpany's choice of accounting policies. The negative impact on the performance of the co mpany can be directly traced to the level of earn ings management in the co mpany. The presence of the Audit Co mmittee is mandated in all Malaysian Public Listed companies by virtue of the Bursa Malaysia Listing Requirements. The monitoring and oversight factor of the Audit Co mmittee provides a check and balance mechanism which may be effect ive in curbing rampant earn ings management. This study of 153 Malaysian Public Listed companies utilises secondary data derived fro m Annual Reports of Year 2011 to ascertain the impact of Audit Co mmittee characteristics, namely frequency of Audit Co mmittee meet ings, size of Audit Co mmittee and independence of the Audit Committee, on earnings management. The pro xy for earn ings management is discretionary accruals and the modified Jones Model is used to determine discretionary accruals.