Scholarlink

This paper aims to investigate the impact of audit quality on earnings management in developing economies, considering their specific challenges and distinctive differences. Big Four audit firms, auditor specialists, audit firm tenure, and audit timeliness were used as a proxy for audit quality. The study employs a panel data set of 31 non-financial listed Palestinian firms from 2017 to 2021. The modified Jones model (1995) was used as a proxy for earnings management. The empirical results show a negative association between audit firm size and earnings management. However, audit firm tenure, timeliness, auditor specialization, and auditor change do not affect earnings management. The findings reveal that auditors have limited control over management's opportunistic behavior. The empirical results of this study contribute to the existing research by providing evidence on how audit firms affect earnings management in unstable environments such as Palestine. Moreover, the study provides essential information to policymakers, regulators, and investors in examining the management opportunistic behavior and how audit firms control such behavior.

错误：搜索内容不能为空，请输入英文关键词
错误：关键词超出字数限制，请精简
高级检索

Does Audit Quality Mitigate Earnings Management in an Unstable Economic Environment? Evidence from Emerging Markets

  • 章节

  • 发表日期：

    2025年

查看全文
  • Hisham Madi,
  • Mohammed AlAshi,
  • Ahmed Alafifi,
  • Basma Abu Rayya

摘要

This paper aims to investigate the impact of audit quality on earnings management in developing economies, considering their specific challenges and distinctive differences. Big Four audit firms, auditor specialists, audit firm tenure, and audit timeliness were used as a proxy for audit quality. The study employs a panel data set of 31 non-financial listed Palestinian firms from 2017 to 2021. The modified Jones model (1995) was used as a proxy for earnings management. The empirical results show a negative association between audit firm size and earnings management. However, audit firm tenure, timeliness, auditor specialization, and auditor change do not affect earnings management. The findings reveal that auditors have limited control over management's opportunistic behavior. The empirical results of this study contribute to the existing research by providing evidence on how audit firms affect earnings management in unstable environments such as Palestine. Moreover, the study provides essential information to policymakers, regulators, and investors in examining the management opportunistic behavior and how audit firms control such behavior.