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van Caneghem, T (2004)

The impact of audit quality on earnings rounding-up behaviour: some UK evidence

European Accounting Review 13(4), 771-786.

ISSN/ISBN: Not available at this time. DOI: 10.1080/0963818042000216866



Abstract: Previous studies (see, for example, Carslaw, 1988; Thomas, 1989; Niskanen and Keloharju, 2000; Kinnunen and Koskela, 2002; Van Caneghem, 2002) clearly suggest that public companiesí managers tend to round up the first digit of reported earnings (i.e. for companies reporting profits). Based on a sample of listed UK companies and employing earnings rounding-up behaviour (henceforth ERUB) as an indication of earnings management, I attempt to determine the impact of differences in audit quality on earnings management. When I rely on the very popular brand-name proxy (i.e. BigFive versus non-BigFive auditors) to capture differences in audit quality, findings are inconsistent with BigFive auditors constraining earnings management practices (i.e. findings suggest ERUB for both BigFive and non-BigFive clients). Employing an alternative proxy (i.e. based on auditorsí industry expertise), findings are only weakly consistent with specialist BigFive auditors constraining earnings management (i.e. ERUB) practices.


Bibtex:
@article{, title={The impact of audit quality on earnings rounding-up behaviour: some UK evidence}, author={Van Caneghem, Tom}, journal={European Accounting Review}, volume={13}, number={4}, pages={771--786}, year={2004}, publisher={Taylor \& Francis}, doi={10.1080/0963818042000216866} }


Reference Type: Journal Article

Subject Area(s): Accounting