Audit Quality and Real Earnings Management: An Analysis Based on the Auditor Industry Specialization and Client Importance
Real earnings management reflects management intervention to manipulate earnings based on the company's normal business activities. This intervention is veiled and difficult to detect so it requires specialist auditors who expertise in industrial business practices. In the agency theory, the qu...
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| Format: | Article |
| Language: | English |
| Published: |
Mashhad: Behzad Hassannezhad Kashani
2019-06-01
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| Series: | International Journal of Management, Accounting and Economics |
| Subjects: | |
| Online Access: | https://www.ijmae.com/article_114553_b1af34ff52067a86eca2b1b93c0c789f.pdf |
| _version_ | 1797690393246040064 |
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| author | Nur Anissa Mukhlasin Mukhlasin Thio Petronila |
| author_facet | Nur Anissa Mukhlasin Mukhlasin Thio Petronila |
| author_sort | Nur Anissa |
| collection | DOAJ |
| description | Real earnings management reflects management intervention to manipulate earnings based on the company's normal business activities. This intervention is veiled and difficult to detect so it requires specialist auditors who expertise in industrial business practices. In the agency theory, the quality auditors representing external governance serves to reduce asymmetric information between management and shareholders and minimize agency costs. Auditor quality is determined by the auditor's ability and independence to detect abnormal business practices. Industry specialization auditors have the competence, expertise, and skills to find out whether or not there are abnormal business practices for the purpose of earnings manipulation. Meanwhile, client importance that reflects the level of economic dependence of the auditor on the client encourages the auditor to be ignorant or tolerant of manipulation of business activities for the purpose of management opportunism. This research was conducted on manufacturing and trading companies listed on the Indonesia Stock Exchange in the 2012-2016 period. Observation is carried out on 430 data and analysis by multiple linear regression. The test results prove that the auditors of industrial specialization have a negative effect on real earnings management. Client importance also proved to have a positive effect on real earnings management. |
| first_indexed | 2024-03-12T01:58:57Z |
| format | Article |
| id | doaj.art-2164410da2094d849c68cfd6267fb607 |
| institution | Directory Open Access Journal |
| issn | 2383-2126 |
| language | English |
| last_indexed | 2024-03-12T01:58:57Z |
| publishDate | 2019-06-01 |
| publisher | Mashhad: Behzad Hassannezhad Kashani |
| record_format | Article |
| series | International Journal of Management, Accounting and Economics |
| spelling | doaj.art-2164410da2094d849c68cfd6267fb6072023-09-07T21:47:56ZengMashhad: Behzad Hassannezhad KashaniInternational Journal of Management, Accounting and Economics2383-21262019-06-0166436453114553Audit Quality and Real Earnings Management: An Analysis Based on the Auditor Industry Specialization and Client ImportanceNur Anissa0Mukhlasin Mukhlasin1Thio Petronila2Accounting Department, Faculty of Economic, Universitas Satya Negara, IndonesiaDepartment of Accounting, Atma Jaya Catholic University of Indonesia, Jakarta, IndonesiaAccounting Department, Faculty of Economic and Business, Universitas Katholik Indonesia Atma Jaya, IndonesiaReal earnings management reflects management intervention to manipulate earnings based on the company's normal business activities. This intervention is veiled and difficult to detect so it requires specialist auditors who expertise in industrial business practices. In the agency theory, the quality auditors representing external governance serves to reduce asymmetric information between management and shareholders and minimize agency costs. Auditor quality is determined by the auditor's ability and independence to detect abnormal business practices. Industry specialization auditors have the competence, expertise, and skills to find out whether or not there are abnormal business practices for the purpose of earnings manipulation. Meanwhile, client importance that reflects the level of economic dependence of the auditor on the client encourages the auditor to be ignorant or tolerant of manipulation of business activities for the purpose of management opportunism. This research was conducted on manufacturing and trading companies listed on the Indonesia Stock Exchange in the 2012-2016 period. Observation is carried out on 430 data and analysis by multiple linear regression. The test results prove that the auditors of industrial specialization have a negative effect on real earnings management. Client importance also proved to have a positive effect on real earnings management.https://www.ijmae.com/article_114553_b1af34ff52067a86eca2b1b93c0c789f.pdfreal earnings managementauditor industry specializationclient importance |
| spellingShingle | Nur Anissa Mukhlasin Mukhlasin Thio Petronila Audit Quality and Real Earnings Management: An Analysis Based on the Auditor Industry Specialization and Client Importance International Journal of Management, Accounting and Economics real earnings management auditor industry specialization client importance |
| title | Audit Quality and Real Earnings Management: An Analysis Based on the Auditor Industry Specialization and Client Importance |
| title_full | Audit Quality and Real Earnings Management: An Analysis Based on the Auditor Industry Specialization and Client Importance |
| title_fullStr | Audit Quality and Real Earnings Management: An Analysis Based on the Auditor Industry Specialization and Client Importance |
| title_full_unstemmed | Audit Quality and Real Earnings Management: An Analysis Based on the Auditor Industry Specialization and Client Importance |
| title_short | Audit Quality and Real Earnings Management: An Analysis Based on the Auditor Industry Specialization and Client Importance |
| title_sort | audit quality and real earnings management an analysis based on the auditor industry specialization and client importance |
| topic | real earnings management auditor industry specialization client importance |
| url | https://www.ijmae.com/article_114553_b1af34ff52067a86eca2b1b93c0c789f.pdf |
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