Big 4 auditing companies, earnings manipulation and earnings conservatism: evidence from an emerging market
Big 4 auditing companies, earnings manipulation and earnings conservatism: evidence from an emerging market
Author(s): Thabang Mokoaleli-Mokoteli, George Emmanuel IatridisSubject(s): Business Economy / Management, Political economy, Accounting - Business Administration
Published by: ТОВ “Консалтингово-видавнича компанія “Ділові перспективи”
Keywords: Big 4 auditing; conditional conservatism; unconditional conservatism; managerial opportunism; earnings management;
Summary/Abstract: This study focuses on South African listed companies and investigates the relation between Big 4 auditing companies, earnings management and earnings conservatism. It shows that companies audited by a Big 4 auditor leads to a more timely recognition of large losses and to lower levels of earnings manipulation and higher conditional conservatism. The findings report that the conditional form of conservatism is negatively related to unconditional conservatism. Higher conservatism is also reported for firms with high leverage and those that convey bad news. The opposite has been found for firms with high growth. The findings, in general support the notion that the new Companies’ Act in South Africa and the King III are effective corporate governance tools and the observed cases of corporate failure may be due to other factors, including management hubris.
Journal: Investment Management and Financial Innovations
- Issue Year: 14/2017
- Issue No: 1
- Page Range: 35-45
- Page Count: 11
- Language: English