Audit Firm Industry Specialization and Client Disclosure Quality

Dunn, Kimberly; Mayhew, Brian W.

doi:10.1023/b:rast.0000013628.49401.69

Cited by 444 publications

(318 citation statements)

References 15 publications

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“…These results are consistent with the theory that auditor industry specialization plays a role in enhancing audit quality. Indeed, firms that engage industry specialists to audit their external financial reports may benefit from a reduced likelihood of accruals earnings management (Dunn and Mayhew, 2004;Rusmin, 2010;Gul et al, 2010). However, Table 8 indicates also that the association between industry specialization and REM is insignificant (p = 0.220).…”

Section: Results Of the Regressionsmentioning

confidence: 69%

“…In the same context, Rusmin (2010) argue that the discretionary accruals of industry specialist auditor clients are lower than discretionary accruals of non-industry specialist clients. Similarly, Dunn and Mayhew (2004) confirm that the use of an auditor with industry specialization will help curb earnings management. These findings are consistent with the theory that auditors specialize in various industries to achieve product differentiation and provide higher audit quality.…”

Section: Industry Specialization and Earnings Managementmentioning

confidence: 65%

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Audit Quality and Earnings Management in the Tunisian Context

Zgarni¹,

Khmoussi²,

Zehri³

2012

ijafr

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In this study, we test the effect of the implementation of the financial security law (n° 2005-96) and the audit quality (Big 4 auditors, auditor industry specialization and audit tenure) on constraining the extent of real and accruals based earnings management in the Tunisian context. Using 319 firm-year observations during the period 2000-2010, our results suggest that auditor industry specialization and Big 4 auditors associated with lower levels of accruals earnings management. We also find that the Big 4 auditors enhance the extent of real earnings management (REM). Further, we document that longer auditor tenure is not associated with greater real and accruals earnings management. Finally, our findings suggest that the adoption of the financial securities law of 2005 is not effective on reducing earnings management in the Tunisian context.

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Section: Results Of the Regressionsmentioning

confidence: 69%

Section: Industry Specialization and Earnings Managementmentioning

confidence: 65%

Audit Quality and Earnings Management in the Tunisian Context

Zgarni¹,

Khmoussi²,

Zehri³

2012

ijafr

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“…For instance, according to Dunn and Mayhew (2004), a high quality audit decreases information asymmetry in a free market environment. Almutairi, Dunn and Skantz (2009) emphasize that there is a relationship between low information asymmetry and the terms of office and the specialty of auditors.…”

Section: The Relationship Between Information Asymmetry and The Qualimentioning

confidence: 99%

The Relationship between Information Asymmetry and the Quality of Audit: An Empirical Study in Istanbul Stock Exchange

Varici¹

2013

IBR

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Information asymmetry occurs where one party of an enterprise has more or better information than the other. The primary objective is to remove asymmetric information. It is argued that information asymmetry can be removed by a high quality audit. This study examined the differences between the enterprises audited by Big Four audit companies that were employed for measuring the quality of audit and the enterprises not put into such audit in terms of information asymmetry variables. The enterprises audited by four big audit companies, which were argued to make a high quality audit, were compared with other enterprises in terms of 6 variables used in the measurement of information asymmetry. The study was conducted on manufacturing industry enterprises traded at Istanbul Stock Exchange (Note 1). The variables of the independence of the board of directors, market value/book value, and Tobin Q were found to be statistically different in two separate enterprise groups. However, the study yielded results contrary to those reported in the literature.

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“…A literatura confirma que as firmas de auditoria buscam se especializar para competir em uma esfera diferente do valor dos honorários (DUNN;MAYHEW, 2004), e sugere que as firmas de auditoria influenciam o nível de tax avoidance de seus clientes pelo âmbito das demonstrações financeiras bem como dos resultados tributários, uma vez que a busca pela redução da despesa tributária está diretamente ligada à aplicação das normas contábeis e das leis tributárias (MAYDEW; SHACKELFORD, 2007). Hanlon e Slemrod (2009) sugerem que arranjos tributários muito avançados podem levar o mercado a temer que a entidade não esteja apenas burlando a legislação tributária mas também manipulando as demonstrações contábeis.…”

Section: Tax Avoidanceunclassified