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 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.
abnormal accruals, auditor independence, auditor specialisation, Singapore, earnings management, audit value attributes, auditing
Accounting | Business Law, Public Responsibility, and Ethics | Corporate Finance
Corporate Governance, Auditing and Risk Management
Journal of Accounting, Auditing and Performance Evaluation
Rusmin, Rusmin; Van der Zahn, Jean-Luc Wolfgang Mitchell; Tower, Greg; and Brown, Alistair.
Auditor Independence, Auditor Specialization and Earnings Management: Further Evidence from Singapore. (2006). Journal of Accounting, Auditing and Performance Evaluation. 3, (2), 166-193. Research Collection School Of Accountancy.
Available at: http://ink.library.smu.edu.sg/soa_research/125