The Joint Effect of Audit Quality and Legal Regimes on the Use of Real Earnings Management : International Evidence
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
Author(s)
Detail(s)
| Original language | English |
|---|---|
| Pages (from-to) | 2225-2257 |
| Journal / Publication | Contemporary Accounting Research |
| Volume | 35 |
| Issue number | 4 |
| Online published | 22 Nov 2017 |
| Publication status | Published - Oct 2018 |
| Externally published | Yes |
Link(s)
Abstract
This study investigates whether and how a firm's real earnings management (REM) is influenced by the strength of a country's legal regime and the presence of a Big 4 auditor. In a cross-country examination using data from 22 countries, we find that REM increases in countries with stronger legal regimes as firms switch from accrual-based earnings management (AEM) to REM. The presence of a Big 4 auditor reduces REM (as well as AEM) and attenuates the positive relation between legal regime strength and REM. Our results suggest that higher-quality auditors limit client firms' use of REM, especially in countries with a strong legal regime. © CAAA
Research Area(s)
- audit quality, gestion du résultat réel, legal regime, qualité de l'audit, real earnings management, régime juridique
Citation Format(s)
The Joint Effect of Audit Quality and Legal Regimes on the Use of Real Earnings Management: International Evidence. / CHOI, Ahrum; CHOI, Jong-Hag; SOHN, Byungcherl Charlie.
In: Contemporary Accounting Research, Vol. 35, No. 4, 10.2018, p. 2225-2257.
In: Contemporary Accounting Research, Vol. 35, No. 4, 10.2018, p. 2225-2257.
Research output: Journal Publications and Reviews › RGC 21 - Publication in refereed journal › peer-review
