Audit Quality and Earnings Management: Evidence from Portugal
Accounting manipulation is a current problem, reported in many different contexts. Several audit quality studies indicate that there is a relationship between the quality of the audit and the manipulation of the results. These also show that accruals reduce when the auditor is independent or the aud...
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| Format: | Article |
| Language: | English |
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Athens Institute for Education and Research
2018-04-01
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| Series: | Athens Journal of Business & Economics |
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| Online Access: | https://www.athensjournals.gr/business/2018-4-2-4-Lopes.pdf |
| _version_ | 1829139166175166464 |
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| author | Ana Paula Lopes |
| author_facet | Ana Paula Lopes |
| author_sort | Ana Paula Lopes |
| collection | DOAJ |
| description | Accounting manipulation is a current problem, reported in many different contexts. Several audit quality studies indicate that there is a relationship between the quality of the audit and the manipulation of the results. These also show that accruals reduce when the auditor is independent or the audit company is large, and suggest that Big 4 Audit Firms present higher levels of audit quality, when compared with other companies. The aim of this paper is to examine if there is a relationship between the manipulation of results and the quality of the audit, based on the study of the behavior of discretionary accruals in Portuguese non-listed companies. Collected on the SABI (Iberian Balance sheet Analysis System) database, the sample is composed of 4723 companies from 2013 to 2015. The empirical model of this study consists of a multiple linear regression in order to explain the relationship between the discretionary accruals and the firm size, debt, volume business and profitability, based on the Modified Jones Model. The results suggest that there is a relationship between audit quality and earnings manipulation. The level of earnings management is significantly lower among companies contracting a Big 4 audit firm, as compared to companies using a non-Big 4 audit firm |
| first_indexed | 2024-12-14T19:32:22Z |
| format | Article |
| id | doaj.art-b0070a4d910e47babe3f8576519c4401 |
| institution | Directory Open Access Journal |
| issn | 2241-794X |
| language | English |
| last_indexed | 2024-12-14T19:32:22Z |
| publishDate | 2018-04-01 |
| publisher | Athens Institute for Education and Research |
| record_format | Article |
| series | Athens Journal of Business & Economics |
| spelling | doaj.art-b0070a4d910e47babe3f8576519c44012022-12-21T22:50:03ZengAthens Institute for Education and ResearchAthens Journal of Business & Economics2241-794X2018-04-014217919210.30958/ajbe.4.2.4Audit Quality and Earnings Management: Evidence from PortugalAna Paula Lopes0Associate Professor at Institute of Accounting and Administration of Porto (ISCAP)/Polytechnic of Porto, PortugalAccounting manipulation is a current problem, reported in many different contexts. Several audit quality studies indicate that there is a relationship between the quality of the audit and the manipulation of the results. These also show that accruals reduce when the auditor is independent or the audit company is large, and suggest that Big 4 Audit Firms present higher levels of audit quality, when compared with other companies. The aim of this paper is to examine if there is a relationship between the manipulation of results and the quality of the audit, based on the study of the behavior of discretionary accruals in Portuguese non-listed companies. Collected on the SABI (Iberian Balance sheet Analysis System) database, the sample is composed of 4723 companies from 2013 to 2015. The empirical model of this study consists of a multiple linear regression in order to explain the relationship between the discretionary accruals and the firm size, debt, volume business and profitability, based on the Modified Jones Model. The results suggest that there is a relationship between audit quality and earnings manipulation. The level of earnings management is significantly lower among companies contracting a Big 4 audit firm, as compared to companies using a non-Big 4 audit firmhttps://www.athensjournals.gr/business/2018-4-2-4-Lopes.pdfaudit qualitydiscretionary accrualsearnings managementaudit firm size (big 4 or non-big 4) |
| spellingShingle | Ana Paula Lopes Audit Quality and Earnings Management: Evidence from Portugal Athens Journal of Business & Economics audit quality discretionary accruals earnings management audit firm size (big 4 or non-big 4) |
| title | Audit Quality and Earnings Management: Evidence from Portugal |
| title_full | Audit Quality and Earnings Management: Evidence from Portugal |
| title_fullStr | Audit Quality and Earnings Management: Evidence from Portugal |
| title_full_unstemmed | Audit Quality and Earnings Management: Evidence from Portugal |
| title_short | Audit Quality and Earnings Management: Evidence from Portugal |
| title_sort | audit quality and earnings management evidence from portugal |
| topic | audit quality discretionary accruals earnings management audit firm size (big 4 or non-big 4) |
| url | https://www.athensjournals.gr/business/2018-4-2-4-Lopes.pdf |
| work_keys_str_mv | AT anapaulalopes auditqualityandearningsmanagementevidencefromportugal |