The Role of Auditor Industry Specialization on Earnings Management and Future Operational Performance

This research examines the association between auditor industry specialization and real earnings management and its impact on future operating performance.This essay investigates whether clients of industry specialist auditors are constrained from managing earnings through accruals manipulation and,...

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Autores principales:	Hossein Etemadi, Adel Azar, Mahdi Nazemi Ardakani
Formato:	article
Lenguaje:	FA
Publicado:	Shahid Bahonar University of Kerman 2012
Materias:	auditor industry specialization discretionary accruals future operating performance real earnings management Accounting. Bookkeeping HF5601-5689
Acceso en línea:	https://doaj.org/article/d42b24ae962441fca38c5696f119503f
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spelling	oai:doaj.org-article:d42b24ae962441fca38c5696f119503f2021-11-04T19:40:21ZThe Role of Auditor Industry Specialization on Earnings Management and Future Operational Performance2008-89142476-292X10.22103/jak.2012.53https://doaj.org/article/d42b24ae962441fca38c5696f119503f2012-06-01T00:00:00Zhttps://jak.uk.ac.ir/article_53_50bf6cdc74b91bc3fb9ecba0423f00db.pdfhttps://doaj.org/toc/2008-8914https://doaj.org/toc/2476-292XThis research examines the association between auditor industry specialization and real earnings management and its impact on future operating performance.This essay investigates whether clients of industry specialist auditors are constrained from managing earnings through accruals manipulation and, therefore, are more likely to engage in real activities manipulation and then examines whether operating performance declines for firms suspected of real activities manipulation For investigating this relationship; we use data for 115 listed companies on Tehran Stock Exchange for period of 2002-2007. In this study the absolute value of discretionary accruals is used as a proxy for accounting-based earnings management and a market approach as a proxy for determining of specialist industry auditor and sales manipulation, Reduction of discretionary expenditures & Overproduction for measuring real earnings management. ROA is used as a measure for operating performance, Findings indicate that clients of industry specialist auditors have lower absolute value of accruals relative to firms with incentives to manage earnings that do not hire industry specialist auditors. These clients of industry specialist auditors are also more likely to engage in real activities manipulation, suggesting this is a possible unintended consequence of hiring an industry specialist auditor. I also document evidence that firms suspected of real activities manipulation do not have lower future operating performance relative to firms not suspected of real activities manipulation.Hossein EtemadiAdel AzarMahdi Nazemi ArdakaniShahid Bahonar University of Kermanarticleauditor industry specializationdiscretionary accrualsfuture operating performancereal earnings managementAccounting. BookkeepingHF5601-5689FAمجله دانش حسابداری, Vol 1, Iss 1, Pp 9-28 (2012)
institution	DOAJ
collection	DOAJ
language	FA
topic	auditor industry specialization discretionary accruals future operating performance real earnings management Accounting. Bookkeeping HF5601-5689
spellingShingle	auditor industry specialization discretionary accruals future operating performance real earnings management Accounting. Bookkeeping HF5601-5689 Hossein Etemadi Adel Azar Mahdi Nazemi Ardakani The Role of Auditor Industry Specialization on Earnings Management and Future Operational Performance
description	This research examines the association between auditor industry specialization and real earnings management and its impact on future operating performance.This essay investigates whether clients of industry specialist auditors are constrained from managing earnings through accruals manipulation and, therefore, are more likely to engage in real activities manipulation and then examines whether operating performance declines for firms suspected of real activities manipulation For investigating this relationship; we use data for 115 listed companies on Tehran Stock Exchange for period of 2002-2007. In this study the absolute value of discretionary accruals is used as a proxy for accounting-based earnings management and a market approach as a proxy for determining of specialist industry auditor and sales manipulation, Reduction of discretionary expenditures & Overproduction for measuring real earnings management. ROA is used as a measure for operating performance, Findings indicate that clients of industry specialist auditors have lower absolute value of accruals relative to firms with incentives to manage earnings that do not hire industry specialist auditors. These clients of industry specialist auditors are also more likely to engage in real activities manipulation, suggesting this is a possible unintended consequence of hiring an industry specialist auditor. I also document evidence that firms suspected of real activities manipulation do not have lower future operating performance relative to firms not suspected of real activities manipulation.
format	article
author	Hossein Etemadi Adel Azar Mahdi Nazemi Ardakani
author_facet	Hossein Etemadi Adel Azar Mahdi Nazemi Ardakani
author_sort	Hossein Etemadi
title	The Role of Auditor Industry Specialization on Earnings Management and Future Operational Performance
title_short	The Role of Auditor Industry Specialization on Earnings Management and Future Operational Performance
title_full	The Role of Auditor Industry Specialization on Earnings Management and Future Operational Performance
title_fullStr	The Role of Auditor Industry Specialization on Earnings Management and Future Operational Performance
title_full_unstemmed	The Role of Auditor Industry Specialization on Earnings Management and Future Operational Performance
title_sort	role of auditor industry specialization on earnings management and future operational performance
publisher	Shahid Bahonar University of Kerman
publishDate	2012
url	https://doaj.org/article/d42b24ae962441fca38c5696f119503f
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The Role of Auditor Industry Specialization on Earnings Management and Future Operational Performance

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