Audit quality and earnings management in less developed economies: the case of Saudi Arabia

Habbash, Murya; Alghamdi, Salim

doi:10.1007/s10997-016-9347-3

Cited by 81 publications

(95 citation statements)

References 48 publications

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“…Panel A in Table 2 shows that the absolute values of discretionary accruals, estimated utilizing the Kothari et al (2005) model (DACKO), have a mean (median) of 0.079 (0.054) and a standard deviation of 0.08, indicating that the total volume of earnings management is 7.9% (5.4%) of lagged total assets. These values are comparable with prior evidence from Jordan (Alzoubi, 2016) and other developing countries (Habbash and Alghamdi, 2017) as well as that from developed countries with weak investor protection regimes (Othman and Zeghal, 2006;Ianniello, 2015).…”

Section: Descriptive Statisticssupporting

confidence: 86%

“…Following prior research (Gul et al, 2009;Alali, 2011;Tsipouridou and Spathis, 2012;Albersmann and Hohenfels, 2017;Habbash and Alghamdi, 2017), besides employing the absolute (unsigned) value of discretionary accruals, we also analyzed the signed earnings management with the aim of discovering possible different discretions practiced by managers to engage in earnings management (Ashbaugh et al, 2003;Jenkins et al, 2006). Therefore, the observations of the discretionary accruals were split into two groups: positive (income-increasing) discretionary accruals and negative (income-decreasing) discretionary accruals.…”

Section: Signed Accrualsmentioning

confidence: 99%

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Does audit quality influence earnings management in emerging markets? Evidence from Jordan

Almarayeh¹,

Guzmán²,

Abdullatif³

2020

RC-SAR

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Este estudio investiga si algunos atributos de la calidad de auditoría son capaces de restringir la manipulación de resultados en un país en desarrollo, Jordania, cuyo contexto cultural, económico e institucional es muy diferente del contexto de los países analizados anteriormente. Se usó la regresión de mínimos cuadrados generalizada (GLS) para estudiar la asociación entre dos atributos de la calidad de auditoría (tamaño del auditor y honorarios de auditoría) y los ajustes por devengos discrecionales, como proxy de la manipulación de resultados, para una muestra de empresas industriales que cotizan en la Bolsa de valores de Amman durante el período 2012 - 2016. Los resultados son consistentes con la expectativa de que en los países emergentes la auditoría externa puede funcionar de manera diferente a la de los países anglosajones y de Europa occidental con respecto a su papel en la restricción de la manipulación de resultados e indican que, dado el entorno institucional en Jordania, el tamaño del auditor y los honorarios de auditoría no tienen un efecto significativo en la manipulación de resultados. Este estudio proporciona a los lectores información sobre si y cómo el entorno institucional influye en la relación entre la calidad de la auditoría y la manipulación de resultados. Además, presenta nueva evidencia sobre el efecto moderador del nivel de los honorarios de auditoría en su relación con la manipulación de resultados. Los resultados de este estudio podrían proporcionar información valiosa a los reguladores, tanto en Jordania como en otros países con un entorno económico e institucional similar, para prevenir las prácticas de manipulación de resultados. This study investigates whether some audit quality attributes are capable to restrict earnings management in a developing country, Jordan, whose cultural, economic and institutional context is very different from most previously analyzed countries’ context. Generalized least square regression (GLS) was used to study the association between two audit quality attributes (auditor size and audit fees) and discretionary accruals, as a proxy of earnings management, for a sample of industrial firms listed on the Amman Stock Exchange during the period 2012 – 2016. The findings are consistent with the expectation that in emerging countries external audit can function differently from that in Anglo-Saxon and West-European countries with regard to its role in restricting earnings management and indicate that, given the institutional environment in Jordan, auditor size and audit fees have no significant effect on earnings management. This study provides readers with information about if and how the institutional setting influences the relationship between audit quality and earnings management. Furthermore, it presents new evidence regarding the moderating effect of the level of audit fees on their relation with earnings management. This study’s findings could provide valuable information to regulators and standards setters, both in Jordan and other countries with a similar economic and institutional environment, which can help in preventing earnings management practices.

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Section: Descriptive Statisticssupporting

confidence: 86%

Section: Signed Accrualsmentioning

confidence: 99%

Does audit quality influence earnings management in emerging markets? Evidence from Jordan

Almarayeh¹,

Guzmán²,

Abdullatif³

2020

RC-SAR

View full text Add to dashboard Cite

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“…Terkait likuiditas (liquidity), rasio diarti kan sebagai kapasitas suatu perusahaan un tuk membayar kewajiban lancarnya (Azami & Salehi, 2017;Habbash & Alghamdi, 2017;Kandemir, 2013;Merawati & Haryani, 2015;Muhsin, 2018). Likuiditas dianggap bisa mengukur kemampuan aset likuid untuk memenuhi liabilitas lancarnya (Cao, Chen, & Higgs, 2016;Fung, Zhou, & Zhu, 2016;Kleinman & Lin, 2017).…”

Section: Metodeunclassified

Implikasi Likuiditas Perusahaan Bagi Opinion Shopping

Verawaty

Jaya

Pratiwi

2018

jamal

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Implikasi Likuiditas Perusahaan bagi Opinion Shopping. Penelitian ini menguji pengaruh opinion shopping terhadap biaya audit abnormal, likuiditas, profitabilitas, dan lamanya perikatan audit. Pene litian ini menggunakan metode regresi logistik terhadap 40 perusahaan terbuka sektor manufaktur di Indonesia. Hasil analisis mununjukkan bahwa perusahaan mengalami kendala jika kurang likuid karena tidak dapat memenuhi kompensasi bagi stakeholder kreditur. Hal ini diyakini memperkuat probabilitas manajemen untuk melakukan opinion shopping demi mendapat opini wajar tanpa pengecualian. Oleh karena itu, akun tan profesional harus memegang teguh kode etik profesi untuk menjaga integritas dengan mengeluarkan opini sesuai kondisi yang sebenarnya.

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“…Chen et al (2005),Habbash and Alghamdi (2017) andGerayli et al (2011), this study employed Modified Jones Model to detect earnings management. Modified Jones Model vastly outperforms other models in the detection of earnings management practices.…”

mentioning

confidence: 99%

Audit Quality and Earnings Management: Evidence From Turkey

Özcan

2019

Uluslararası İktisadi Ve İdari İncelemeler Dergisi

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A b s t r a c tEarnings 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.Kazanç yönetimi iş dünyasında en fazla tartışılan konular arasındadır. Kazançların değer ilgililiği kazanç yönetiminden olumsuz olarak etkilenmektedir. Bu çalışmanın amacı, denetim kalitesi ve kazanç yönetimi arasındaki ilişkiyi Borsa İstanbul'a kote olan şirketler açısından analiz etmektir. Denetim kalitesi ve kazanç yönetimi arasındaki ilişki sıradan en küçük kareler yöntemi kullanılarak analiz edilmektedir. 2013-2018 yıllarını kapsayan ve Borsa İstanbul'a kote olan 97 reel sektör firmasının verilerinden yararlanarak denetim kalitesinin üç göstergesi (denetçi bağımsızlığı, denetçinin sektörel uzmanlığı ve denetim firmasının müşteri firmaya hizmet süresi) sıradan en küçük kareler yöntemi kullanılarak analiz edilmektedir. Sıradan en küçük kareler yönteminin sonuçlarına göre; denetçi bağımsızlığı ve denetçinin sektörel uzmanlığı kazanç yönetimini önemli derecede azaltmaktadır ve denetim firması ile müşteri firma arasındaki uzun süreli ilişki, müşteri firmanın daha yoğun bir şekilde kazanç yönetimini uygulamasına yol açmaktadır. Bunlara ek olarak, bağımsız denetiminin kalitesinin yüksek olması firmaların kazanç yönetimi uygulamalarını önemli derecede azaltmaktadır.

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Audit quality and earnings management in less developed economies: the case of Saudi Arabia

Cited by 81 publications

References 48 publications

Does audit quality influence earnings management in emerging markets? Evidence from Jordan

Does audit quality influence earnings management in emerging markets? Evidence from Jordan

Implikasi Likuiditas Perusahaan Bagi Opinion Shopping

Audit Quality and Earnings Management: Evidence From Turkey

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