Article2017

The Joint Effect of Audit Quality and Legal Regimes on the Use of Real Earnings Management: International Evidence

Ahrum Choi · Jong‐Hag Choi · Byungcherl Charlie Sohn

114 citations0/0 files storedContemporary Accounting Research

No readable copy stored yet — this record is metadata only.

No open-access location is known for this record yet.

Literature note Cite in a project Citation map

Auditing, Earnings Management, Governance Accounting and Organizational Management Corporate Governance and Financial Management

Abstract

ABSTRACT This study investigates whether and how a firm's real earnings management (REM) is influenced by the strength of a country's legal regime and the presence of a Big 4 auditor. In a cross‐country examination using data from 22 countries, we find that REM increases in countries with stronger legal regimes as firms switch from accrual‐based earnings management (AEM) to REM. The presence of a Big 4 auditor reduces REM (as well as AEM) and attenuates the positive relation between legal regime strength and REM. Our results suggest that higher‐quality auditors limit client firms’ use of REM, especially in countries with a strong legal regime.

Paper brief

Loading…

Cite this work

Citation unavailable for this work.

BibTeX RIS CSL-JSON

No public copy is stored for this record, so only the metadata is cited.

Citations in this library

Citation map →

Stored only when both papers are in the corpus — 114 citations exist upstream.

References

1978Specification Tests in Econometrics 1998Law and Finance 1991Earnings Management During Import Relief Investigations 2005Performance matched discretionary accrual measures 1995Detecting Earnings Management.1997Industry costs of equity 2000The separation of ownership and control in East Asian Corporations 2003Earnings Management through Real Activities Manipulation

Cited by

2020Top executives’ early‐life experience and financial disclosure quality: impact from the Great Chinese Famine 2020Economic policy uncertainty exposure and earnings management: evidence from China 2020How do market power and industry competition influence the effect of corporate governance on earnings management?2022Busy auditors, financial reporting timeliness and quality 2021The impact of audit quality on real earnings management in the UK context 2021The differential effect of accrual-based and real earnings management on audit fees: international evidence

Explore the map →

Papers that cite the same references — the relational fallback while embeddings are still backfilling.

Imported from OpenAlex (CC0) — nothing here is generated.