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Audit quality, management ownership, and the informativeness of accounting earnings

Version 2 2024-06-04, 06:53
Version 1 2016-10-07, 16:43
journal contribution
posted on 2024-06-04, 06:53 authored by Ferdinand GulFerdinand Gul, S Lynn, JSL Tsui
This study has two primary objectives. First, it examines whether audit quality moderates the association between informativeness of accounting earnings and management ownership. Second, it also examines whether audit quality moderates the negative association between management ownership and discretionary accruals. Using Australian data, it is shown that the positive relationship between returns-earnings association and management ownership is significantly weaker for firms with Big 6 auditors.Similarly, the negative association between management ownership and discretionary accruals is weaker for firms with Big 6 auditors. These results are consistent with the theory that higher quality audits can mitigate insiders' incentives to exploit accounting-based contractual constraints and manage earnings as a result of the separation of ownership and control.

History

Journal

Journal of accounting auditing and finance

Volume

17

Pagination

25-49

Location

London, Eng.

ISSN

0148-558X

Language

eng

Publication classification

C Journal article, C1.1 Refereed article in a scholarly journal

Copyright notice

2002, Sage

Issue

1

Publisher

SAGE