Abstract:
In this study we examine the relation between auditors، auditor’s reports and earnings management (EM). EM is measured by discretionary accrual (DA). In the case of auditors، type of auditor institutions، type of auditor’s opinion in audit reports and the number of qualification paragraphs in audit reports are measured on DA. To examine DA، the modified Jones model is used. Type of audit institutions is divided to Audit Organization and other، and type of auditor’s opinion is divided to qualified opinion and clean opinion. In this research we use the multivariate regression. To test the research hypothesis، we employ pooled and cross-sectional data of 71 companies listed in TSE in 2002-2005. Results of the study showed that only type of audit institutions is related to DA.
Machine summary:
Master of Accounting Graduate, University of Tehran, Iran (Date of Receipt: 22/03/2008, Date of Approval: 16/10/2008) Abstract This research investigates the relationship between independent auditors and the type of auditor's opinion with earnings management.
In this research, we aim to see whether independent auditors and audit reports can provide indications of companies' earnings management and play an effective role in warning users of financial statements about problems facing the company in the field of financial reporting or internal controls.
(2008) in a study examining the causes of the bankruptcy of Laventhol Horwath accounting firm concluded in a part of the research that the company was more inclined to provide modified opinions to its clients, while these clients did not have more or less discretionary accruals compared to the clients of other auditing firms [15].
(2000) concluded that the qualified opinion of auditors has a direct relationship with discretionary accruals, meaning that as earnings management increases, the probability of receiving a qualified opinion increases [6].
The statistical population of the research included all companies listed on the Tehran Stock Exchange between 1380 and 1384, for which the necessary financial information, especially the accompanying notes to the financial statements, was available to extract the required data, including the account of discretionary accruals.
Regression Results Related to Estimating the 'a's of Accruals in the Modified Jones Model (Refer to the image on the page) Figure 4.
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