search query: @indexterm AUDITING / total: 1120
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| Author: | Caramanis, C. Lennox, C. |
| Title: | Audit effort and earnings management |
| Journal: | Journal of Accounting & Economics
2008 : MAR, VOL. 45:1, p. 116-138 |
| Index terms: | auditing earnings Greece managers hours of work |
| Language: | eng |
| Abstract: | This study tests the effect of audit effort on earnings management. It uses a unique database of hours worked by auditors on 9738 audits in Greece between 1994 and 2002. When audit hours are lower, abnormal accruals tend to be more often positive than negative, positive abnormal accruals tend to be larger, and companies seem to be more likely to manage earnings upwards in order to meet or beat the zero earnings benchmark. The results remain after the study controls for endogeneity between audit hours and earnings management. In conclusion, low audit effort increases the extent to which managers are able to report aggressively high earnings. |
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