Audit adjustments and the discontinuity in earnings distribution around zero

• Main Authors: Lim, Chu Yeong, Suwardy, Themin, Zhang, Tracey Chunqi
• Other Authors: Nanyang Business School
• Format: Article
• Language: English
• Published: 2023
• Subjects: Business::Auditing; Audit Quality; Earnings Management
• Online Access: https://hdl.handle.net/10356/172139
• Institution: Nanyang Technological University

Purpose: Previous research in auditing has used the probability of small profits or losses as a measure of audit quality. The purpose of this paper is to investigate the validity of the underlying assumption in prior audit literature that auditing mitigates clients’ inclination towards loss avoidanc...