Auditor Independence, Auditor Specialization and Earnings Management: Further Evidence from Singapore

Auditor Independence, Auditor Specialization and Earnings Management: Further Evidence from Singapore

This study uses data from 298 Singapore publicly listed firms to examine the association between earnings management and two audit value attributes: auditor independence and auditor specialisation. We find firms engaging a specialist auditor had significantly lower levels of abnormal accruals than t...

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Bibliographic Details
Main Authors: Rusmin, Rusmin, Van der Zahn, Jean-Luc Wolfgang Mitchell, Tower, Greg, Brown, Alistair
Format: text
Language:English
Published: Institutional Knowledge at Singapore Management University 2006
Subjects:
abnormal accruals
auditor independence
auditor specialisation
Singapore
earnings management
audit value attributes
auditing
Accounting
Business Law, Public Responsibility, and Ethics
Corporate Finance
Online Access:https://ink.library.smu.edu.sg/soa_research/125
http://dx.doi.org/10.1504/IJAAPE.2006.010300
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Institution: Singapore Management University
Language: English
Description
Summary:This study uses data from 298 Singapore publicly listed firms to examine the association between earnings management and two audit value attributes: auditor independence and auditor specialisation. We find firms engaging a specialist auditor had significantly lower levels of abnormal accruals than those using non-specialists. This supports the view industry specialisation better enables an auditor to constrain a client's earnings management. Our findings indicate the lack of a universal association between audit value attributes and earnings management. Results imply recent action of Singapore policymakers to strengthen rules governing audit independence as related to non-audit services may have been premature.

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