Discretionary Accounting Accruals, Managers' Incentives, and Audit Fees*

Gul, Ferdinand A.; Chen, Charles J.P.; Tsui, Judy S. L.

doi:10.1506/686e-nf2j-73x6-g540

Cited by 364 publications

(126 citation statements)

References 38 publications

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“…Carcello et al, 2002;Gul et al, 2003;Hay, Knechel, & Wong, 2006;S. W. M. Ho & Ng, 1996;Lin & Liu, 2009).…”

Section: Control Variablesmentioning

confidence: 99%

Family Ownership, Auditor Choice and Audit Fees: Evidence from Hong Kong

Lei

Lam²

2018

ijafr

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Purpose -The primary purpose of this paper is to examine the impact of family control/ownership on auditor choice and audit fees in Hong Kong. Besides, this paper also addresses the impact of multiple directorship of audit committee members on these two external auditing dimensions. Findings -The results indicate that family firms have a higher likelihood to appoint Big 5 auditors, it supports the signaling hypothesis. Contrasting the perceived higher audit risk, they incur lower audit fees. The results also show the independent audit committee members with multiple directorships are not affected by their busyness. Our results are also robust to the alternative definition of family firms and by using the sub-sample within 2004 -2009. We also find that the firms controlled by recognized Big family in Hong Kong society incur higher audit fees but no support for family firm incurring higher non audit fee.

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“…Carcello et al, 2002;Gul et al, 2003;Hay, Knechel, & Wong, 2006;S. W. M. Ho & Ng, 1996;Lin & Liu, 2009).…”

Section: Control Variablesmentioning

confidence: 99%

Family Ownership, Auditor Choice and Audit Fees: Evidence from Hong Kong

Lei

Lam²

2018

ijafr

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“…These evidences are consistent with institutional investors monitoring and constraining the self-serving behaviour of corporate managers. Some studies suggest that when managers hold a sufficient proportion of ownership, the agency problem should be mitigated, because larger managerial ownership fosters alignment incentives, and thus opportunistic earnings management are not employed (Gul et al, 2003). Warfield et al (1995) provide evidence that managerial ownership is negatively related to the magnitude of earnings management.…”

Section: Hypothesis Developmentmentioning

confidence: 99%

Ownership Characteristics and Earnings Management in China

Guo

2015

The Chinese Economy

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Chinese firms are characterized by multiple ownership and high ownership concentration. In this research, we conduct an intensive investigation into the determination of ownership characteristics in earnings management behaviors for Chinese domestic listed firms. Our results indicate that earnings management is determined by the motivations of different types of ownerships. In particular, when a state agency is the largest owner, firms are less likely to undertake earnings management, although the state ownership ratio is positively associated with earnings management. Tradable ownership and particularly concentrated tradable ownership reduce earnings management, while total ownership concentration fosters earnings management.

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“…Our evidence that large book-tax differences explain higher audit fees implies that such differences indicate greater audit risk, complementing existing capital market and tax research. 1 A number of studies link lower earnings quality or the risk of earnings management with higher audit risk and higher audit fees (Bell et al 2001;Seetharaman et al 2002;and Gul et al 2003). Krishnan and Visvanathan (2008) argue that the risk of earnings management is of particular concern for the auditor for two reasons.…”

Section: Introductionmentioning

confidence: 99%

Audit Fees and Book-Tax Differences

Hanlon¹,

Krishnan²,

Mills³

2012

Journal of the American Taxation Association

108

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We investigate whether book-tax differences are associated with higher audit fees, a proxy for auditor risk assessments and auditor effort. Our evidence suggests that there is a significantly positive relation. Further, this association is larger for firms that appear to have managed earnings (i.e., have high accruals) relative to those that are tax avoiders (i.e., have low cash effective tax rates). Our evidence is consistent with large book-tax differences representing an observable proxy for earnings management that is associated with auditor decisions. Our study contributes to capital market research that examines audit fees, as well as other research that examines the usefulness of book-tax differences for market participants.

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Discretionary Accounting Accruals, Managers' Incentives, and Audit Fees*

Cited by 364 publications

References 38 publications

Family Ownership, Auditor Choice and Audit Fees: Evidence from Hong Kong

Family Ownership, Auditor Choice and Audit Fees: Evidence from Hong Kong

Ownership Characteristics and Earnings Management in China

Audit Fees and Book-Tax Differences

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