TY - JOUR
T1 - Earnings management and audit qualifications
T2 - A non-matched sample approach
AU - Garcia-Blandon, Josep
AU - Bosch, Josep Maria Argiles
AU - Martinez-Blasco, Monica
PY - 2013
Y1 - 2013
N2 - This chapter investigates whether earnings management activities increase the likelihood of receiving a qualified audit report. We have carried out this study with a sample of Spanish companies for the period 2001-2009. Previous research on the issue is not only scarce but also suffers from methodological pitfalls. In all cases, researchers have followed a matched sample approach without considering the implications of such approach for the statistical analysis. Despite its great popularity among researchers in accounting, the use of matched-based sampling is susceptible to produce technical errors in the statistical analysis. The main problem consists in the generalization of results obtained with a nonrandom sample to the whole population of firms. Our results do not show a significant relationship between EM and qualified audit reports. We have also addressed whether the international financial crisis has affected our results and concluded that Spanish companies seem to have used EM during the crisis to push down earnings, probably expecting to take advantage of the positive earnings surprises during the postcrisis period. Nevertheless, the financial crisis has not changed the nature of the EM-qualified opinions relationship.
AB - This chapter investigates whether earnings management activities increase the likelihood of receiving a qualified audit report. We have carried out this study with a sample of Spanish companies for the period 2001-2009. Previous research on the issue is not only scarce but also suffers from methodological pitfalls. In all cases, researchers have followed a matched sample approach without considering the implications of such approach for the statistical analysis. Despite its great popularity among researchers in accounting, the use of matched-based sampling is susceptible to produce technical errors in the statistical analysis. The main problem consists in the generalization of results obtained with a nonrandom sample to the whole population of firms. Our results do not show a significant relationship between EM and qualified audit reports. We have also addressed whether the international financial crisis has affected our results and concluded that Spanish companies seem to have used EM during the crisis to push down earnings, probably expecting to take advantage of the positive earnings surprises during the postcrisis period. Nevertheless, the financial crisis has not changed the nature of the EM-qualified opinions relationship.
UR - http://www.scopus.com/inward/record.url?scp=84887031127&partnerID=8YFLogxK
UR - https://www.webofscience.com/api/gateway?GWVersion=2&SrcApp=pure_univeritat_ramon_llull&SrcAuth=WosAPI&KeyUT=WOS:000360370700003&DestLinkType=FullRecord&DestApp=WOS_CPL
U2 - 10.1108/S0196-3821(2013)0000029005
DO - 10.1108/S0196-3821(2013)0000029005
M3 - Article
AN - SCOPUS:84887031127
SN - 0196-3821
SP - 29
EP - 62
JO - Research in Finance
JF - Research in Finance
ER -