Alhadab, M and Clacher, I orcid.org/0000-0002-8892-6697 (2018) The impact of audit quality on real and accrual earnings management around IPOs. The British Accounting Review, 50 (4). pp. 442-461. ISSN 0890-8389
Abstract
We examine the relation between audit quality and the earnings management activities of IPO firms. The impact of high quality auditors on real earnings management has been researched in a number of settings e.g. SEOs. However, to date, there has been no work on the effect of high quality auditors on real activities-based manipulation around IPOs. We examine UK IPOs between 1998 and 2008 and find evidence that high quality auditors constrain the use of real activities manipulation that occurs via the management of discretionary expenses. We also find evidence, consistent with prior research, that high quality auditors constrain the manipulation of discretionary accruals. Crucially, we find IPO firms audited by high quality auditors undertake sales-based manipulation in order to manage earnings upward at the end of the IPO year. The presence of high quality auditors is not, therefore, sufficient to constrain all forms of earnings management.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2018 Elsevier Ltd. This is an author produced version of a paper published in The British Accounting Review. Uploaded in accordance with the publisher's self-archiving policy. |
Keywords: | Earnings management; Discretionary accruals; Real activities manipulation; Audit quality; Initial public offering |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Accounting & Finance Division (LUBS) (Leeds) |
Depositing User: | Symplectic Publications |
Date Deposited: | 10 Jan 2018 11:47 |
Last Modified: | 16 Nov 2020 16:50 |
Status: | Published |
Publisher: | Elsevier |
Identification Number: | 10.1016/j.bar.2017.12.003 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:126025 |