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Author: Gabriel M. Tyokoso
Publisher:
ISBN:
Category :
Languages : en
Pages : 36
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Book Description
This paper examines the effect of audit quality attributes on earnings management of listed oil marketing companies in Nigeria. Secondary data were extracted from nine companies listed on the Nigerian Stock Exchange (NSE) from 2009 to 2014 and analyzed using panel multiple regression technique. The result of Hausman specification test suggests that the fixed effect regression model is most appropriate for the dataset. The result of the fixed effect regression model showed that audit firm size, auditor industry specialization, client importance and audit committee financial expertise are positively associated with earnings management of the firms at 1%, 5%, 1% and 5% level of significance respectively. In contrast, auditor tenure and the interaction between audit committee financial expertise and auditor industry specialization were negatively and significantly associated with earnings management of the firms at 5% level of significance respectively. The paper therefore concludes that audit quality has significant effect on earnings management of listed oil marketing companies in Nigeria. In line with the findings, the paper recommends among others that public companies who hire the services of audit firms in Nigeria should judge audit firms on the basis of performance in prior assignments and not just the size of the audit firm in view of the fact that audit firm size is not associated with less earnings management of Nigerian firms. Also, regulatory authorities such as SEC should come out with a policy that will encourage audit firms in Nigeria to specialize along industry lines of companies listed on the Nigerian Stock Exchange (NSE) to enable effective audit service. Regulatory bodies such as SEC and Financial Reporting Council of Nigeria (FRCN) should also come out with a policy that makes it mandatory for Nigerian companies to publish both audit and non-audit fees paid to their auditors. The disclosure of both fees will enable users of audited financial statements in Nigeria to determine the level of auditor client importance and consequently, the reliance to place on the auditor's report.
Author: Gabriel M. Tyokoso
Publisher:
ISBN:
Category :
Languages : en
Pages : 36
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Book Description
This paper examines the effect of audit quality attributes on earnings management of listed oil marketing companies in Nigeria. Secondary data were extracted from nine companies listed on the Nigerian Stock Exchange (NSE) from 2009 to 2014 and analyzed using panel multiple regression technique. The result of Hausman specification test suggests that the fixed effect regression model is most appropriate for the dataset. The result of the fixed effect regression model showed that audit firm size, auditor industry specialization, client importance and audit committee financial expertise are positively associated with earnings management of the firms at 1%, 5%, 1% and 5% level of significance respectively. In contrast, auditor tenure and the interaction between audit committee financial expertise and auditor industry specialization were negatively and significantly associated with earnings management of the firms at 5% level of significance respectively. The paper therefore concludes that audit quality has significant effect on earnings management of listed oil marketing companies in Nigeria. In line with the findings, the paper recommends among others that public companies who hire the services of audit firms in Nigeria should judge audit firms on the basis of performance in prior assignments and not just the size of the audit firm in view of the fact that audit firm size is not associated with less earnings management of Nigerian firms. Also, regulatory authorities such as SEC should come out with a policy that will encourage audit firms in Nigeria to specialize along industry lines of companies listed on the Nigerian Stock Exchange (NSE) to enable effective audit service. Regulatory bodies such as SEC and Financial Reporting Council of Nigeria (FRCN) should also come out with a policy that makes it mandatory for Nigerian companies to publish both audit and non-audit fees paid to their auditors. The disclosure of both fees will enable users of audited financial statements in Nigeria to determine the level of auditor client importance and consequently, the reliance to place on the auditor's report.
Author: Bashir Babatunde Alao
Publisher:
ISBN:
Category :
Languages : en
Pages : 10
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Book Description
The primary aim of this study is to evaluate the impact of audit quality on earnings management practices among oil and gas companies listed in the Nigeria Stock Exchange (NSE) for period of 5 years (2014-2018). The focus of the research is on oil and gas companies due to recent allegations of large scale financial misrepresentations associated with the Nigerian oil sector. Similarly, over the past decades, the global markets have witnessed several accounting scandals mainly because of the manipulation of the accounting figures reported in the financial statements. To achieve the objectives of this study, the corporate annual reports of twelve (12) listed oil and gas companies for the period under consideration were used for the study. In testing the research hypotheses, the study adopted the use of both descriptive statistics and Ordinary Least Square (OLS) regression analysis is used to explore the relationship between Audit quality proxies which are Audit firm size, auditor industry specialization and auditor independence and Earnings management in listed companies. The management of earnings is measured using Discretionary Accruals (a modified Jones model) while Eviews 8.1as the tool of data analysis of OLS regression. The results suggest that there is a relationship between audit quality and earnings manipulation; auditors' independence has a significant positive relationship with earnings management, while the rest of the hypotheses indicate that the other variables remain to have an insignificant relationship with earnings management.
Author: Ademola Akinteye
Publisher: GRIN Verlag
ISBN: 334607871X
Category : Business & Economics
Languages : en
Pages : 862
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Book Description
Doctoral Thesis / Dissertation from the year 2015 in the subject Business economics - Investment and Finance, grade: Great Distinction, UGSM-Monarch Business School Switzerland (Accounting and Finance), course: Doctor of Philosophy in Finance, language: English, abstract: The dissertation examined Earnings Management and Corporate Governance Governance Practices of the firms that are listed on the floor of the Nigerian Stock Exchange. The researcher investigated the published financial statements of all the listed companies across all the sectors of the exchange using empirical quantitative research methods. Al the variables of earnings management were extracted from the published annual financial statements and Directors Annual Reports through Content Analysis. The paper further explored all the variables of corporate governance as published by the Directors in the Annual Reports in the Financial Statements and through a face to face recorded interviews of the members of the Board of Directors, the members of the Audit Committees and the Heads of Internal Audit Functions in the Listed Public Companies. The study documented that companies that are listed on the Nigerian Stock Exchange are involved in both the upward and downward earnings management practices. This findings cut across all the Sectors and categorization of the companies on the Nigerian Stock Exchange. The research thus recommended the need for better oversight by the Board of Directors, the Audit Committee and the Market Regulators mainly the Security and Exchange Commission and the Nigerian Stock Exchange. The findings of the Research on Corporate Governance is mixed. In certain sectors, evidence of strong corporate governance are documented as reflected in the quality of Board Members, the Quality of the deliberations at the Board meetings, the independence of the Board, the independence of the Audit Committee and the independence and effectiveness of the Head of the Internal Audit function measured by the reporting line of the holder of this role. In some sectors, the ingredients of strong corporate governance were missing thus suggesting a need for a more stricter regime of corporate governance to be implemented in these corporations.
Author: Ademola Akinteye
Publisher:
ISBN: 9783346078728
Category :
Languages : en
Pages : 868
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Book Description
Doctoral Thesis / Dissertation from the year 2015 in the subject Business economics - Investment and Finance, grade: Great Distinction, UGSM-Monarch Business School Switzerland (Accounting and Finance), course: Doctor of Philosophy in Finance, language: English, abstract: The dissertation examined Earnings Management and Corporate Governance Governance Practices of the firms that are listed on the floor of the Nigerian Stock Exchange. The researcher investigated the published financial statements of all the listed companies across all the sectors of the exchange using empirical quantitative research methods. Al the variables of earnings management were extracted from the published annual financial statements and Directors Annual Reports through Content Analysis. The paper further explored all the variables of corporate governance as published by the Directors in the Annual Reports in the Financial Statements and through a face to face recorded interviews of the members of the Board of Directors, the members of the Audit Committees and the Heads of Internal Audit Functions in the Listed Public Companies. The study documented that companies that are listed on the Nigerian Stock Exchange are involved in both the upward and downward earnings management practices. This findings cut across all the Sectors and categorization of the companies on the Nigerian Stock Exchange. The research thus recommended the need for better oversight by the Board of Directors, the Audit Committee and the Market Regulators mainly the Security and Exchange Commission and the Nigerian Stock Exchange. The findings of the Research on Corporate Governance is mixed. In certain sectors, evidence of strong corporate governance are documented as reflected in the quality of Board Members, the Quality of the deliberations at the Board meetings, the independence of the Board, the independence of the Audit Committee and the independence and effectiveness of the Head of the Internal Audit function measur
Author: Connie L. Becker
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This study examines the relation between audit quality and earnings management. Consistent with prior research, we treat audit quality as a dichotomous variable and assume that Big Six auditors are of higher quality than non-Big Six auditors. Earnings management is captured by discretionary accruals that are estimated using a cross-sectional version of the Jones (1991) model. Prior literature suggests that auditors are more likely to object to management's accounting choices that increase earnings (as opposed to decrease earnings) and that auditors are more likely to be sued when they are associated with financial statements that overstate earnings (as compared to understate earnings). Therefore, we hypothesize that clients of non-Big Six auditors report discretionary accruals that increase income relatively more than the discretionary accruals reported by clients of Big Six auditors. This hypothesis is supported by evidence from a sample of 10, 379 Big Six and 2, 179 non-Big Six firm-years. Specifically, clients of non-Big Six auditors report discretionary accruals that are, on average, 1.5 to 2.1 percent of total assets higher than the discretionary accruals reported by clients of Big Six auditors. Also, consistent with earnings management, we find that the mean and median of the absolute value of discretionary accruals are greater for firms with non-Big Six auditors. This also indicates that lower audit quality is associated with more quot;accounting flexibility.quot.
Author: Shaohong Su
Publisher:
ISBN:
Category : Corporations
Languages : en
Pages : 178
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Author: Reem J. Almousawi
Publisher:
ISBN:
Category :
Languages : en
Pages : 89
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Author: Abdullah Mohammed Ayedh
Publisher:
ISBN:
Category : Auditing
Languages : en
Pages : 726
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Book Description
The early twenty first century witnessed several accounting scandals that culminated in the collapse of many renown large organizations such as Enron and the bankruptcy filing of WorldCom. These scandals cast doubts on the quality of auditing. As part of the efforts of restoring quality of auditing and earnings reporting, several standards, guidelines, and codes have been imposed by International and Malaysian regulatory bodies. However, those regulatory authorities view audit quality as subjective, multi-dimensional, vast and a complex issue (Financial Reporting Council, 2007; International Auditing and Assurance Standard board, 2011; Canadian Public Accountability Board, 2012), which makes it difficult to define and measure. In order to untangle this multi-dimensional and complex issue, this study conducted a systematic review, maps the audit quality literature and came up with an audit quality framework (AQF). AQF is a comprehensive framework with the inclusion of the International Standard on Quality Control 1 (ISQC 1). The AQF is further enhanced by inculcating qualities from an Islamic perspective. The AQF reveals that the outcome of a quality audit should be reflected in the financial reporting quality, which is proxied by diminished earnings management practices. There is strong evidence that earnings management practices during the abnormal time (financial crisis) differed in terms of magnitude and direction (Mohd-Saleh and Ahmed, 2005; Johl et al., 2007; Iatridis and Dimitras, 2013). Hence, whether earnings management practices in the context of Malaysian listed companies really differ during the recent financial crisis needs to be tested before determining whether audit quality determinants are able to alleviate it. Therefore, this study examines earnings management practices during the recent financial crisis and makes a comparison with the pre-crisis period. In addition, this study investigates the effect of different determinants of audit quality on earnings management practices. The hypotheses of this study were developed and examined based on the related literature, both agency and big bath theories. Data were collected from literature, databases, related regulations and standards (audit quality framework), annual reports (audit quality determinants), and the Bloomberg database (earnings management components). The AQF suggests that audit quality determinants can be categorized into two major dimensions of attributes (i.e. proficiency and morality). The proficiency attributes dimension is related to the ability of the auditor to detect the misstatement, whilst the morality attributes dimension is the willingness of the auditor to report the detected misstatement. The Islamic perspective shows that the two main categories of the AQF (proficiency, morality) are not new and are referred to in the Holy Qur'ān as strength and trustworthiness. Furthermore, Islam emphasizes more on the latter. As for the empirical findings of paired-sample T-tests analysis for 1,189 firm-years, it is revealed that there is a significant decrease of positive earnings management and a significant increase in downwards earnings management during the recent global financial crisis (2009; 2008) compared to before crisis period (2006; 2005). These findings confirm that Malaysian managers apply the big bath strategy during the crisis period. However, the magnitude of earnings management of the Malaysian companies in the recent financial crisis was distinctly lower than those of prior studies (Johl et al., 2007; Iatridis and Dimitras, 2013). Considering this difference, the study tests whether audit quality determinants, as used by prior studies, similarly deterred earnings management practices in the recent crisis in Malaysia. The findings of the regression analysis for the 245 Malaysian listed companies revealed that five out of ten audit quality determinants (i.e. audit firm type, auditor industry specialist, board of directors' size, board of directors' independence, and audit committee independence) play a significant role in restricting earnings management practices. Therefore, the study shows that, by analysing the empirical findings and referring back to the AQF, audit quality determinants related to competent monitoring by expert auditors (proficiency attributes) and independent board of directors and audit committee (morality attributes) deter earnings management practices during the recent financial crisis. However, other audit quality determinants seem ineffective under these circumstances.
Author: Reem J. Al-Mousawi
Publisher:
ISBN:
Category :
Languages : en
Pages : 32
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Author: Amel Kouaib
Publisher:
ISBN:
Category :
Languages : en
Pages : 12
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This article emphasizes the significance of researching the cross effect of using jointly external audit quality and ownership structure over managerial discretion in a largely unexplored, non-Western and emerging context. The analysis is based on a sample of 61 Tunisian firms listed and unlisted on the Tunis Stock Exchange and operating in the industrial and commercial sectors during the period 2007-2011. To provide evidence on this topic, we conduct an empirical examination. First, we examine the effect of external audit quality and ownership structure on the discretionary accruals for the whole sample. We find that only auditor reputation has a negative and significant effect on earnings management. Second, this article provides empirical evidence on the cross effect of external audit quality variables and capital concentration on earnings management. This test suggests that this combination has a negative and significant effect on earnings management in industrial firms but it has a positive and non significant effect in commercial firms. Finally, the third empirical test concerns the combined effect of external audit quality and institutional property on earnings management. We find that the cross effect of this combined relation is negatively and significantly associated with earnings management of industrial firms but it has no significant effect on the earnings management of commercial firms. As for the cross effect of the auditor seniority and the institutional property, it has a positive and a significant effect in the commercial sectors, while, it is positively and non-significantly associated with earnings management of industrial firms.
