This study uses a new measure, aggregate audit adjustment (AAA), of audit quality to reexamine the relation between audit quality and earnings management. The AAA is defined as the difference between pre-audited earning and post-audited earning, which represents an objective measure of the auditors' ability at detecting errors and irregularities in the pre-audited financial statements, and then credibly making necessary adjustments. We predict that there is a negative effect of aggregate audit adjustment on earnings management (measured by discretionary accruals). The empirical result indicates that even in the case of controlling the auditor type (Big 5 vs. Non-Big 5), this relation still holds. This means that higher quality auditors can not only report a lower degree of discretionary accruals but also adjust a larger amount/magnitude of errors (or perhaps unwarranted accruals) included in their client's pre-audited earnings. This finding complements and reinforces the findings of prior research, in particular those provided in Becker et al. (1998).
{"title":"Aggregate Audit Adjustments and Discretionary Accruals: Further Evidence on the Relation between Audit Quality and Earnings Management","authors":"Y. Hsieh, Y. Tsai","doi":"10.2139/ssrn.616221","DOIUrl":"https://doi.org/10.2139/ssrn.616221","url":null,"abstract":"This study uses a new measure, aggregate audit adjustment (AAA), of audit quality to reexamine the relation between audit quality and earnings management. The AAA is defined as the difference between pre-audited earning and post-audited earning, which represents an objective measure of the auditors' ability at detecting errors and irregularities in the pre-audited financial statements, and then credibly making necessary adjustments. We predict that there is a negative effect of aggregate audit adjustment on earnings management (measured by discretionary accruals). The empirical result indicates that even in the case of controlling the auditor type (Big 5 vs. Non-Big 5), this relation still holds. This means that higher quality auditors can not only report a lower degree of discretionary accruals but also adjust a larger amount/magnitude of errors (or perhaps unwarranted accruals) included in their client's pre-audited earnings. This finding complements and reinforces the findings of prior research, in particular those provided in Becker et al. (1998).","PeriodicalId":356551,"journal":{"name":"American Accounting Association Meetings (AAA)","volume":"413 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-11-05","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126692249","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Ohlson (1995) motivates the adoption of the historical price model in value relevance studies, which expresses value as a function of earnings and book values (e.g., Collins et al. 1997; Francis and Schipper 1999). However, Ohlson (2001) argues that 'other information' is ignored in these studies and the valuation model could be improved by incorporating analyst earnings forecasts. This study uses the argumentation provided by Ohlson (2001) and examines whether the empirical version of the residual income model that uses earnings forecasts is a better model than the historical price model in seven Asian countries: Hong Kong, Malaysia, Singapore, Thailand, Indonesia, the Philippines and Korea, as well as in country groups and subgroups by their legal origins: the common-law group and the civil-law group (with subgroups of French origin and German origin). The results show that the adjusted R2 for the residual income model is higher than for the historical price model in some countries and country groups. The improvements are more significant in countries or country groups where public disclosure is more important to solve the information asymmetry problem between managers and investors.
Ohlson(1995)鼓励在价值相关性研究中采用历史价格模型，该模型将价值表达为收益和账面价值的函数(例如，Collins等人，1997;Francis and Schipper 1999)。然而，Ohlson(2001)认为，在这些研究中忽略了“其他信息”，可以通过纳入分析师的收益预测来改进估值模型。本研究使用了Ohlson(2001)提供的论证，并检验了在七个亚洲国家(香港、马来西亚、新加坡、泰国、印度尼西亚、菲律宾和韩国)以及按法律渊源划分的国家和子群体(普通法群体和大陆法系群体(法国血统和德国血统的子群体)中，使用盈利预测的剩余收入模型的实证版本是否比历史价格模型更好。结果表明，在一些国家和国家组中，剩余收入模型的调整后R2高于历史价格模型。在更重视公开披露以解决管理者与投资者之间信息不对称问题的国家或国家群体中，这种改善更为显著。
{"title":"Do Financial Analysts Play a Role in Valuation? Evidence from Asian Stock Markets","authors":"Yan Bao","doi":"10.2139/ssrn.491542","DOIUrl":"https://doi.org/10.2139/ssrn.491542","url":null,"abstract":"Ohlson (1995) motivates the adoption of the historical price model in value relevance studies, which expresses value as a function of earnings and book values (e.g., Collins et al. 1997; Francis and Schipper 1999). However, Ohlson (2001) argues that 'other information' is ignored in these studies and the valuation model could be improved by incorporating analyst earnings forecasts. This study uses the argumentation provided by Ohlson (2001) and examines whether the empirical version of the residual income model that uses earnings forecasts is a better model than the historical price model in seven Asian countries: Hong Kong, Malaysia, Singapore, Thailand, Indonesia, the Philippines and Korea, as well as in country groups and subgroups by their legal origins: the common-law group and the civil-law group (with subgroups of French origin and German origin). The results show that the adjusted R2 for the residual income model is higher than for the historical price model in some countries and country groups. The improvements are more significant in countries or country groups where public disclosure is more important to solve the information asymmetry problem between managers and investors.","PeriodicalId":356551,"journal":{"name":"American Accounting Association Meetings (AAA)","volume":"14 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2004-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132864001","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
京公网安备 11010802042870号
京ICP备2023020795号-1
扫码关注我们
求助内容：
应助结果提醒方式：