Audit effort and earnings management

• 成果类型: Article
• 署名作者: Caramanis, Constantinos; Lennox, Clive
• 署名单位: Hong Kong University of Science & Technology; Athens University of Economics & Business
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2007.05.002
• 发表日期: 2008
• 关键词: performance; FIRMS; lawsuits; services; QUALITY; PRIVATE; STOCK

摘要

We test the effect of audit effort on earnings management using a unique database of hours worked by auditors on 9,738 audits in Greece between 1994 and 2002. When audit hours are lower, (1) abnormal accruals are more often positive than negative, (2) positive abnormal accruals are larger, and (3) companies are more likely to manage earnings upwards in order to meet or beat the zero earnings benchmark. These results persist after we control for endogeneity between audit hours and earnings management. We conclude that low audit effort increases the extent to which managers are able to report aggressively high earnings. (c) 2007 Elsevier B.V. All rights reserved.