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

Hadriche, Manel

doi:10.17265/1548-6583/2015.07.002

Cited by 5 publications

(9 citation statements)

References 23 publications

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“…Their findings proved that both auditor type and auditor expertise constrain income-increasing earnings management, and auditor industry expertise merely has a substantial effect on limiting income-increasing earnings management. In French Banking Industry, Hadriche (2015) also found that high auditor reputation constrains earnings management. Likewise, Alhadab and Clacher (2017) surveyed the relationship between audit quality and the earnings management among UK initial public offering (IPO's) firms between 1998 and 2008.…”

Section: The Theoretical Framework Hypothesis Development and Literaturementioning

confidence: 99%

“…Furthermore, big auditors are probably removed by the clients who tend to change the accruals. The reason is that bigger audit firms are more capable to resist managerial pressures than smaller ones (Barizah et al, 2005;Zengn and Ozkan, 2010;Hadriche, 2015). In general, all of the researchers provided evidence that firms audited by non-big auditors have more accruals than firms audited by big auditors, which means famous audit firms prevent clients from earnings management behavior.…”

Section: The Theoretical Framework Hypothesis Development and Literaturementioning

confidence: 99%

“…Because the credibility of these auditors is so high for society, it leads to a greater transparency and better performance for the company (Francis, 1984). Apparently, bigger audit firms are very likely to deter client's earnings management behavior because litigations against well-known auditors might damage their reputation through showing a negative signal about the quality of the audit services, and it even may result in the loss of the majority of their needful clients (Rusmin, 2010;Hadriche, 2015). Therefore, as more famous audit firms are more conservative, it is expected that Iranian companies audited by bigger auditors have lower discretionary accruals than those firms audited by small auditors.…”

Section: The Theoretical Framework Hypothesis Development and Literaturementioning

confidence: 99%

“…In other words, the above requirement has not taken place in this paper. Previous studies have investigated the difference in audit conservatism based on audit firm size (Butler et al, 2004;Muramiya and Takada, 2010;Hadriche, 2015). It is obvious that all auditors are conservative to some extent, but more famous audit firms are probably more conservative than small ones because of having human resources with higher expertise or the probability of losing their credibility (Rusmin, 2010).…”

Section: Introductionmentioning

confidence: 99%

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The impact of auditor conservatism on accruals and going concern opinion: Iranian angle

Salehi

Tarighi

Sahebkar

2018

IMEFM

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Purpose The purpose of this study is to examine high-quality auditors’ conservatism in Iran market based on the classification of Tehran Stock Exchange (TSE) in terms of their reaction to client’s earnings management behavior and their limitations to issue the going concern opinions (GCOs) over an eight-year period from 2009 to 2016. Design/methodology/approach The study population consists of 1,376 observations and 172 companies listed on the TSE during the years 2009-2016. Following the prior studies, the authors used the modified Jones model to measure discretionary accruals as a proxy for earnings management. Findings The results witnessed a negative relationship between the size of the audit firm and discretionary accruals; besides, the relationship between abnormal accruals and GCO on companies audited by high-quality audit firms is higher than other companies. In other words, firms with GCO, which were audited by the Iranian large auditors, report negative abnormal accruals less than those audited by non-large auditors. In short, in spite of the special features of Iran market because of economic sanctions, this paper extends prior literature clarifying that auditors’ conservatism induces accrual reversals when auditors issue GCOs. One interpretation of this result is that the existence of such association is because of not only auditor conservatism but also financially distressed firms. Practical implications The outcomes of this paper will help to fill the knowledge gap related to this issue between developing and developed countries because this investigation exposed more than ever the vital role of the auditor as an observer on the financial statements. Without any exaggeration, this research will make investors and stakeholders aware of this fact that auditor conservatism will be effective in reducing the manipulation of financial reporting and agency problems in emerging markets, particularly those markets facing with economic sanctions like Iran. Originality/value Because of Iran’s dire economic situation during the period under consideration, this is one of the most comprehensive research among the countries of the Middle East that surveys the impact of auditor conservatism on accruals and GCO in an emerging market, namely, Iran.

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Section: The Theoretical Framework Hypothesis Development and Literaturementioning

confidence: 99%

Section: The Theoretical Framework Hypothesis Development and Literaturementioning

confidence: 99%

Section: The Theoretical Framework Hypothesis Development and Literaturementioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

See 2 more Smart Citations

The impact of auditor conservatism on accruals and going concern opinion: Iranian angle

Salehi

Tarighi

Sahebkar

2018

IMEFM

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“…; Bartov et al, 2001;Butler et al, 2004 (Oei et al, 2008;Lin & Yu, 2015;Dawar, 2014;Richardson et al, 2005;Zohdi et al, 2014;Dey & Lim, 2015;Clinch et al, 2012 Zhang, 2007Dawar,2014Sloan,1996;Richardson et al,2005;Clinch et al, 2012;Zohdi et al, 2014;Frankel & Litov,2009; (Choi & Jeter, 1992;Hadriche, 2015;Gajevszky, 2014;Tsipouridou & Spathis, 2013;Brain et al, 2011;Herbohn & Ragunathan, 2008;Francis & Krishnan,1999 (Rosner et al, 2003;Trigeorgis, 2007;Bradshaw et al, 2001;Bartov et al, 2001;Herbohn & Ragunathan, 2008; (Butler et al,2004;Tsipouridou & Spathis,2012;Lin et al,2011;Herbohn & Ragunathan,2008;Arnedo et al,2008;Hadriche,2015) ‫دى‬ ‫ف‬ ‫دت‬ ‫طبق‬ ‫ددة‬ ‫د‬ ‫المتح‬ ‫دات‬ ‫د‬ ‫الي‬ ‫الو‬ ‫دل‬ ‫د‬ ‫مث‬ ‫دات‬ ‫د‬ ‫اس‬ ‫در‬ ‫دت‬ ‫د‬ ‫بق‬ ُ ‫ط‬ ‫دين‬ ‫د‬ ‫ح‬ ‫دى‬ ‫د‬ ‫ف‬ ‫دا.‬ ‫د‬ ‫نس‬ ‫وفر‬ ‫دان‬ ‫د‬ ‫اليون‬ ‫و‬ ‫اليا‬ ‫دتر‬ ‫د‬ ‫أس‬ ‫و‬ ‫دبانيا‬ ‫د‬ ‫أس‬ ‫و‬ ‫دين‬ ‫د‬ ‫الص‬ ‫و‬ ‫دة‬ ‫د‬ ‫يكي‬ ‫األمر‬ (Rusmanto et al,2014;Gajevszky,2014;Johl et al,2007;Moghaddam et al,2016 Moghaddam et al,2016;Oei et al,2008;…”

Section: ‫البحث‬ ‫ممخص‬unclassified

أثر نوع رأى مراقب الحسابات ودرجة تخصصه الصناعى على إستمراریة الأرباح: دراسة تطبیقیة على الشرکات المقیدة بالبورصة المصریة

محمد¹

2020

مجلة الاسکندریة للبحوث المحاسبیة

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This study investigates the impact of auditor opinion and industrial specialization on Earnings Persistence. An Empirical study was conducted on a sample of 257 observations of 53 non-Financial companies listed in the Egyptian Stock Exchange for the period 2012-2016. The literature review revealed that current earnings of companies listed in the Egyptian Stock Exchange have a positive impact on their future earnings. Further, it is conclude that auditor opinion and industrial specialization can affect the relationship between current earnings of these companies and their future earnings. The empirical study revealed a positive and moral effect between current earnings of companies listed in the Egyptian Stock Exchange and their future earnings. The study also found a significant positive effect of the type of auditor opinion for the current year on the relationship between current earnings of companies listed in the Egyptian Stock Exchange and their future earnings. Finally, the study revealed a positive effect of industrial specialization on the relationship between current earnings of companies listed on the Egyptian Stock Exchange and their future earnings.

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Influential Factors Affecting Earnings Management in Public Listed Companies: A Conceptual Model

Algrady

Xie

2022

IRMM

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The issue of earnings management in public listed companies has gained an increasing attention from academicians and policy makers due to its impact on stakeholders’ decision-making. Researchers found that the main factors influencing earnings management can be grouped under internal and external corporate governance aspects. This study proposed a comprehensive model combining some internal and external corporate governance factors affecting earnings management. Based on a review and synthesis of relevant literature, the current study concludes that audit committee characteristics, auditor reputation and audit opinion have a significant impact on earnings management. Further, we predict that auditor reputation has a potential mediating role on the relationship between audit committee characteristics and earnings management, and on the relationship between audit committee characteristics and audit opinion. This research extends the scholarship on earnings management literature and has the potential to provide a set of recommendations to investors and regulatory entities.

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

Cited by 5 publications

References 23 publications

The impact of auditor conservatism on accruals and going concern opinion: Iranian angle

The impact of auditor conservatism on accruals and going concern opinion: Iranian angle

أثر نوع رأى مراقب الحسابات ودرجة تخصصه الصناعى على إستمراریة الأرباح: دراسة تطبیقیة على الشرکات المقیدة بالبورصة المصریة

Influential Factors Affecting Earnings Management in Public Listed Companies: A Conceptual Model

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