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

Publication Type

Journal Article

Publication Date

2006

Abstract

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.

Keywords

abnormal accruals, auditor independence, auditor specialisation, Singapore, earnings management, audit value attributes, auditing

Discipline

Accounting | Business Law, Public Responsibility, and Ethics | Corporate Finance

Research Areas

Corporate Governance, Auditing and Risk Management

Publication

Journal of Accounting, Auditing and Performance Evaluation

Volume

3

Issue

2

First Page

166

Last Page

193

ISSN

1740-8008

Identifier

10.1504/IJAAPE.2006.010300

Publisher

Inderscience

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