European Accounting Review 13(4), 771-786.
ISSN/ISBN: Not available at this time. DOI: 10.1080/0963818042000216866
Abstract: Previous studies (see, for example, Carslaw, 1988; Thomas, 1989; Niskanen and Keloharju, 2000; Kinnunen and Koskela, 2002; Van Caneghem, 2002) clearly suggest that public companies’ managers tend to round up the first digit of reported earnings (i.e. for companies reporting profits). Based on a sample of listed UK companies and employing earnings rounding-up behaviour (henceforth ERUB) as an indication of earnings management, I attempt to determine the impact of differences in audit quality on earnings management. When I rely on the very popular brand-name proxy (i.e. BigFive versus non-BigFive auditors) to capture differences in audit quality, findings are inconsistent with BigFive auditors constraining earnings management practices (i.e. findings suggest ERUB for both BigFive and non-BigFive clients). Employing an alternative proxy (i.e. based on auditors’ industry expertise), findings are only weakly consistent with specialist BigFive auditors constraining earnings management (i.e. ERUB) practices.
Bibtex:
@article{,
title={The impact of audit quality on earnings rounding-up behaviour: some UK evidence},
author={Van Caneghem, Tom},
journal={European Accounting Review},
volume={13},
number={4},
pages={771--786},
year={2004},
publisher={Taylor \& Francis},
doi={10.1080/0963818042000216866}
}
Reference Type: Journal Article
Subject Area(s): Accounting