Do audit firm and audit costs/fees influence earnings management in Swedish municipalities?
(2019) In International Review of Administrative Sciences 85(4). p.673-691- Abstract
- Previous research on the private sector shows that auditors and auditing firms are important actors in ensuring high-quality reporting based on accrual accounting. The aim of this study is to explore whether audit firms and audit costs/fees influence municipalities’ probability of applying earnings management in their annual accounts. The empirical data, which covered the financial years 2011–13, were handpicked from annual reports or retrieved from other sources. In general, our study shows that the probability of earnings management increased if audit costs/fees increased. However, there were differences regarding the probability of earnings management relating to which audit firm was engaged. This implies that audit quality is a factor... (More)
- Previous research on the private sector shows that auditors and auditing firms are important actors in ensuring high-quality reporting based on accrual accounting. The aim of this study is to explore whether audit firms and audit costs/fees influence municipalities’ probability of applying earnings management in their annual accounts. The empirical data, which covered the financial years 2011–13, were handpicked from annual reports or retrieved from other sources. In general, our study shows that the probability of earnings management increased if audit costs/fees increased. However, there were differences regarding the probability of earnings management relating to which audit firm was engaged. This implies that audit quality is a factor that affects the probability of earnings management in Swedish municipalities. The study also indicates that different audit firms make different trade-offs between professional versus commercial logics, and that this is reflected in the clients’ propensity to engage in earnings management. (Less)
Please use this url to cite or link to this publication:
https://lup.lub.lu.se/record/8b26d528-640c-48f0-9d4c-d9698b6d8613
- author
- Donatella, Pierre ; Haraldsson, Mattias LU and Tagesson, Torbjörn LU
- organization
- publishing date
- 2019-12-01
- type
- Contribution to journal
- publication status
- published
- subject
- in
- International Review of Administrative Sciences
- volume
- 85
- issue
- 4
- pages
- 19 pages
- publisher
- SAGE Publications
- external identifiers
-
- scopus:85045042272
- ISSN
- 1461-7226
- DOI
- 10.1177/0020852317748730
- project
- Public Management Research
- language
- English
- LU publication?
- yes
- id
- 8b26d528-640c-48f0-9d4c-d9698b6d8613
- date added to LUP
- 2017-12-21 13:36:56
- date last changed
- 2022-04-25 04:19:07
@article{8b26d528-640c-48f0-9d4c-d9698b6d8613, abstract = {{Previous research on the private sector shows that auditors and auditing firms are important actors in ensuring high-quality reporting based on accrual accounting. The aim of this study is to explore whether audit firms and audit costs/fees influence municipalities’ probability of applying earnings management in their annual accounts. The empirical data, which covered the financial years 2011–13, were handpicked from annual reports or retrieved from other sources. In general, our study shows that the probability of earnings management increased if audit costs/fees increased. However, there were differences regarding the probability of earnings management relating to which audit firm was engaged. This implies that audit quality is a factor that affects the probability of earnings management in Swedish municipalities. The study also indicates that different audit firms make different trade-offs between professional versus commercial logics, and that this is reflected in the clients’ propensity to engage in earnings management.}}, author = {{Donatella, Pierre and Haraldsson, Mattias and Tagesson, Torbjörn}}, issn = {{1461-7226}}, language = {{eng}}, month = {{12}}, number = {{4}}, pages = {{673--691}}, publisher = {{SAGE Publications}}, series = {{International Review of Administrative Sciences}}, title = {{Do audit firm and audit costs/fees influence earnings management in Swedish municipalities?}}, url = {{http://dx.doi.org/10.1177/0020852317748730}}, doi = {{10.1177/0020852317748730}}, volume = {{85}}, year = {{2019}}, }