The Effect Of Audit Quality And Earnings Management On Firm Performance

Lestari, Nanik; Aeni, Nur

doi:10.2991/icaess-19.2019.7

Cited by 4 publications

(5 citation statements)

References 9 publications

(7 reference statements)

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“…This situation proves that good quality auditors will encourage companies to bring out real earnings management. This research aligns with Lestari & Aeni (2019) which shows a significant positive effect on real earnings management. Then it can be formulated into the following hypothesis: H5: Audit quality has a significant positive impact on real earnings management…”

Section: H4: Audit Committee Has a Significant Negative Impact On Real Earnings Managementsupporting

confidence: 89%

“…A better quality auditor can reduce accrual earnings management and switch to real earnings management when the company has a strong urge to require earnings management. According to research by Boedhi & Ratnaningsih (2017) and Lestari & Aeni (2019), these results showed that there is a significant positive impact on real earnings management.…”

Section: Hypothesis Testingmentioning

confidence: 99%

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The Effect of Good Corporate Governance and Financial Distress on Real Earnings Management

Yopie¹,

Erika

2021

J. Accounting

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This research aims to analyze the effect of good corporate governance and financial distress on real earnings management. The sample in this study is a manufacturing company listed on Indonesia Stock Exchange for the 2016-2020 period. Data collection in this study was carried out using secondary data taken from the company's financial statement. The data were analyzed and tested using the SPSS 25 program to test descriptive statistics and outlier tests. The Smart PLS 3.0 program was used to test validity and reliability, test quality indexes, and test hypotheses. The results of this study indicate that institutional ownership has a significant effect on real earnings management, managerial ownership has no significant effect on real earnings management, family ownership has no significant effect on real earnings management, the audit committee has a significant effect on real earnings management, audit quality has a significant effect on management. Financial distress has a significant effect on real earnings management. The moderating variable in this study proves that family ownership has no significant effect on real earnings management which is moderated by political connections.

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Section: H4: Audit Committee Has a Significant Negative Impact On Real Earnings Managementsupporting

confidence: 89%

Section: Hypothesis Testingmentioning

confidence: 99%

The Effect of Good Corporate Governance and Financial Distress on Real Earnings Management

Yopie¹,

Erika

2021

J. Accounting

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“…Up until this point, the vast majority of the investigations have been done about review quality (Andreou et al, 2016), financial reporting quality (Francis et al, 2016;Kim and Zhang, 2016), management style, and compensation (Okolie and Izedonmi, 2014) and informal institutions, like religion (Callen and Fang, 2015). Audit quality is the prospect that audit will present true and fair judgment within the register of its patron for the general public welfare (Lestari and Aeni, 2019). Researchers have explored the connection between audit quality and stock value crash risk in the capital markets of developed economies like USA, UK, and Canada (Lim et al, 2016;Abdel-Wanis, 2021;Yuan et al, 2016).…”

Section: Introductionmentioning

confidence: 99%

Impact of Audit Quality on Stock Price Crash Risk: Evidence from Pakistan Stock Exchange

et al. 2022

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Stock price crash risk is an unfavourable event in business that may decrease the shareholder’s wealth and hurt stability and capital market growth. This study investigates the impact of audit quality measured by auditor industry specialization (AIS), audit tenure (AT), audit committee independence (ACI), audit firm size(AFS)) on stock value crash (measured by down-to-up unpredictability) for a sample of 70 non-financial firms listed in Pakistan Stock Exchange during from 2009 to 2018. Efficient governance enriches financial and operational directness, which cuts down the stock value crashes in rotation. Facing crash risk difficulties, traders impart more funds to stocks of well-regime organizations. The fixed effect model results show that AIS and ACI have a negative and significant impact on crash risk, while there is a positive impact of AFS on stock price crash risk. Moreover, it concludes that it has an insignificant impact on stock price crash risk in Pakistan. It is concluded that effective audit quality lessens the difficulty of data abnormality and improves stock price crash risk. This study has importance for investors to help them identify the most liquid stock and will enable them to decide which stocks to acquire and which to dispose of. This study will also be helpful for academics and scholars to bridge this gap on the influence of audit quality practices on the economic consequences of Pakistan. It will be useful for future research as well as because it will become part of the empirical literature on the economic consequence of stock markets.

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“…Earnings management is becoming popular in recent years, especially in listed companies, and it reduces public confidence. According to Healy and Wahlen (1998), and Lestari and Aeni (2019), earnings management prevails when managers apply personnel judgment methods in preparing financial statements or changing the operating structure of enterprises, they could mislead the users of financial statements about the company's financial position and performance. Failure to detect earnings management in financial statements of financial scandals is associated with failures of large-scale audit firms in the world such as Arthur Andersen.…”

Section: Introductionmentioning

confidence: 99%

Audit opinion and earnings management: Empirical evidence from Vietnam

Doan

Pham

et al. 2021

Investment Management and Financial Innovations

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This paper aims to explore the interaction between earnings management and audit opinions in the context of Vietnam – an emerging country. For this purpose, two regressions were developed with sample consists of 1,294 firm-years in the period from 2018 to 2020. The first regression model uses Audit Opinion as dependent variable, Discretionary Accruals (DA) as independent variable, and other 8 controlling variables. The results demonstrate that the Discretionary Accruals influence audit opinion, significantly at 0.1 level in the study year. This means the auditor’s probability of issuing modified opinion is positively associated with earnings management and with the attendance of a Big 4 audit companies. Another regression model tests influence of auditor size (measured by Opinion of Auditor) on the interaction between management of earnings and audit opinion (measured by Discretionary Accruals) as independent variable, and other 10 controlling variables. Surprisingly, this model is not statistically significant and this confirms that the appearance of a Big 4 audit companies does not significantly affect the nexus between profit management and audit opinion in the case of Vietnamese listed companies. The results suggest that Big 4 audit firms tend to have higher requirements for the true-and-fair information on the client’s financial statements and often have a tendency to issue modified opinions when the financial statements have material errors, or it is impossible to collect sufficient audit evidence. This finding may enhance the decision-making process of users in various circumstances. AcknowledgmentsThis paper is funded by the National Economics University (NEU), Vietnam. The authors thank anonymous reviewers for their contributions and the NEU for supporting this study.

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The Effect Of Audit Quality And Earnings Management On Firm Performance

Cited by 4 publications

References 9 publications

The Effect of Good Corporate Governance and Financial Distress on Real Earnings Management

The Effect of Good Corporate Governance and Financial Distress on Real Earnings Management

Impact of Audit Quality on Stock Price Crash Risk: Evidence from Pakistan Stock Exchange

Audit opinion and earnings management: Empirical evidence from Vietnam

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