Audit opinion and earnings management: Evidence from Greece

Abstract

This study examines the relationship between audit opinions and earnings management, as measured by discretionary accruals, for listed firms on the Athens Stock Exchange (ASE). We divide the qualified audit opinions into two categories:qualified for the going-concern uncertainty and qualified for other reasons. The results indicate that audit opinions are not related to earnings management. Client financial characteristics, such as profitability and size are determinants of the going-concern audit opinion decision. The decision of auditors to issue qualified opinions for other reasons is explained by the type of audit opinion issued in the previous year.

Auditor Reputation, Audit Opinion, and Earnings Management: Evidence From French Banking Industry

“…Additionally, other studies in countries such as France, Belgium, and Greece find that there is no statistically significant difference between the discretionary accruals of firms audited by Big 4 and non-Big 4 auditors (Vander Bauwhede & Willekens, 2004;Othman & Zeghal, 2006;Tsipouridou & Spathis, 2014). For example, Piot and Janin (2005) found no significant association between abnormal accrual and Big 5 auditor.…”

Three essays on the effects of foreign direct investment on the host-country companies: An analysis in the private setting

“…This is inconsistent with the argument previously mentioned, and rather supports the view that MAOs do not highlight earnings management practices (e.g. : Bradshaw, Richardson, & Sloan, 2001;Butler, Leone, & Willenborg, 2004;Herbohn & Ragunathan, 2008;Tsipouridou & Spathis, 2014). Even though foreign group subsidiaries are more prone to engaging in earnings manipulation (paper 2), their accounting practices do not infringe the accounting standards to a greater 11 Thesis overview extent than local group subsidiaries.…”

“…They find a negative relation between MAOs and signed discretionary accruals which they argue is driven by companies with GCUs that have large negative discretionary accruals which are likely due to severe financial distress. Herbohn and Ragunathan (2008) and Tsipouridou and Spathis (2014) use Australian and Greek data respectively and obtain evidence consistent with Butler et al (2004), concluding that MAOs do not highlight earnings management practices.…”

Detecting false financial statements: evidence from Greece in the period of economic crisis

“…In particular, the averages of these financial ratios were outperformed in businesses without falsification in their financial statements rather than those with falsification (Tsipouridou & Spathis, 2014). The problem of corporations' efficiency, namely the capacity of the profits seems to be a motive for falsifying financial statements.…”

“…The sample of the survey composed by twelve companies, which their financial statements auditors identified falsifications (FFS) and this was recorded in their reports. The falsifications were expressed in nineteen cases by the auditors with the types of audit opinion, according to the International Standard on Auditing-ISA 700, as "qualified", or in rare cases as "disclaimer" and "adverse" (Tsipouridou & Spathis, 2014). By controlling the sample of falsified busines ses, 73 manipulations for the period 2008-2015 were reported.…”