Earnings management and audit qualifications: A non-matched sample approach

Josep Garcia-Blandon, Josep Maria Argiles Bosch, Monica Martinez-Blasco

Research output: Book chapterChapterpeer-review

4 Citations (Scopus)


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.

Original languageEnglish
Title of host publicationResearch in Finance
EditorsJohn Kensinger
Number of pages34
Publication statusPublished - 2013

Publication series

NameResearch in Finance
ISSN (Print)0196-3821


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