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Auditor awareness of earnings management

Auditor awareness of earnings management This study examines whether auditor reporting in Greece is associated with different levels of discretionary accruals – a common proxy for earnings management. We focus our research on 91 cases of quoted companies on the Athens Stock Exchange (ASE). These are listed companies that were asked in year 2003 by the Athens Stock Exchange Board to quantify the effects of the qualifications made by their external auditors and post them in the ASE website. Those auditors' reports were referred to published financial statements of the year 2002. By employing some variations of the traditional Jones-discretionary accrual model, we document that several major Greek companies in financial distress with qualified audit opinions do appear to manipulate their reported earnings by exploiting the weaknesses of the Greek GAAP. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Accounting, Auditing and Performance Evaluation Inderscience Publishers

Auditor awareness of earnings management

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Publisher
Inderscience Publishers
Copyright
Copyright © Inderscience Enterprises Ltd. All rights reserved
ISSN
1740-8008
eISSN
1740-8016
DOI
10.1504/IJAAPE.2008.020193
Publisher site
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Abstract

This study examines whether auditor reporting in Greece is associated with different levels of discretionary accruals – a common proxy for earnings management. We focus our research on 91 cases of quoted companies on the Athens Stock Exchange (ASE). These are listed companies that were asked in year 2003 by the Athens Stock Exchange Board to quantify the effects of the qualifications made by their external auditors and post them in the ASE website. Those auditors' reports were referred to published financial statements of the year 2002. By employing some variations of the traditional Jones-discretionary accrual model, we document that several major Greek companies in financial distress with qualified audit opinions do appear to manipulate their reported earnings by exploiting the weaknesses of the Greek GAAP.

Journal

International Journal of Accounting, Auditing and Performance Evaluation – Inderscience Publishers

Published: Jan 1, 2008

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