UM  > Faculty of Business Administration
Do auditors care about real earnings management in their audit fee decisions?
Ahrum Choi1; Byungcherl Charlie Sohn2; Desmond Yuen2
2018-01-10
Source PublicationASIA-PACIFIC JOURNAL OF ACCOUNTING & ECONOMICS
ABS Journal Level2
ISSN1608-1625
Volume25Issue:1-2Pages:21-41
Abstract

This study investigates whether auditors incorporate the implications of potential litigation risk arising from their client firms’ using real earnings management (REM) to manage earnings. Using a large sample of US firms, we find that REM is positively related to audit fees and that this relation is incremental over and beyond the effects of accrual-based earnings management and other control variables. We also find that the positive relation between REM and audit fees is stronger for firms with sophisticated investors or higher stock price sensitivity to accounting earnings. Finally, we find that this positive relation is more pronounced for firms with financial constraints where REM is more likely to stem from managerial opportunism and is perceived as riskier by auditors. These findings are robust to endogeneity controls and various sensitivity tests.

KeywordReal Earnings Management Accrual-based Earnings Management Audit Fees
DOIhttps://doi.org/10.1080/16081625.2016.1231580
URLView the original
Indexed BySSCI ; SSCI
Language英语
WOS Research AreaBusiness & Economics
WOS SubjectBusiness, Finance ; Economics
WOS IDWOS:000423759000002
PublisherROUTLEDGE JOURNALS, TAYLOR & FRANCIS LTD, 2-4 PARK SQUARE, MILTON PARK, ABINGDON OX14 4RN, OXON, ENGLAND
Fulltext Access
Citation statistics
Cited Times [WOS]:12   [WOS Record]     [Related Records in WOS]
Document TypeJournal article
CollectionFaculty of Business Administration
DEPARTMENT OF ACCOUNTING AND INFORMATION MANAGEMENT
Corresponding AuthorByungcherl Charlie Sohn
Affiliation1.Department of Accountancy and Law, School of Business, Hong Kong Baptist University, Kowloon, Hong Kong
2.Department of Accounting and Information Management, Faculty of Business Administration, University of Macau, Macau, China
Corresponding Author AffilicationFaculty of Business Administration
Recommended Citation
GB/T 7714
Ahrum Choi,Byungcherl Charlie Sohn,Desmond Yuen. Do auditors care about real earnings management in their audit fee decisions?[J]. ASIA-PACIFIC JOURNAL OF ACCOUNTING & ECONOMICS,2018,25(1-2):21-41.
APA Ahrum Choi,Byungcherl Charlie Sohn,&Desmond Yuen.(2018).Do auditors care about real earnings management in their audit fee decisions?.ASIA-PACIFIC JOURNAL OF ACCOUNTING & ECONOMICS,25(1-2),21-41.
MLA Ahrum Choi,et al."Do auditors care about real earnings management in their audit fee decisions?".ASIA-PACIFIC JOURNAL OF ACCOUNTING & ECONOMICS 25.1-2(2018):21-41.
Files in This Item:
There are no files associated with this item.
Related Services
Recommend this item
Bookmark
Usage statistics
Export to Endnote
Google Scholar
Similar articles in Google Scholar
[Ahrum Choi]'s Articles
[Byungcherl Charlie Sohn]'s Articles
[Desmond Yuen]'s Articles
Baidu academic
Similar articles in Baidu academic
[Ahrum Choi]'s Articles
[Byungcherl Charlie Sohn]'s Articles
[Desmond Yuen]'s Articles
Bing Scholar
Similar articles in Bing Scholar
[Ahrum Choi]'s Articles
[Byungcherl Charlie Sohn]'s Articles
[Desmond Yuen]'s Articles
Terms of Use
No data!
Social Bookmark/Share
All comments (0)
No comment.
 

Items in the repository are protected by copyright, with all rights reserved, unless otherwise indicated.