Business, Management and Accounting
4 years ago

High Client Importance Does Not Impact Earnings Quality, Study Finds

SSRN Electronic Journal
Client Importance, Non-Audit Services, and Abnormal Accruals
Hyeesoo H. Chung, Sanjay Kallapur

Paper Summary

Related papers

Business, Management and Accounting
4 years ago

Audit quality impacts earnings management, leading to income manipulation by companies.

Earnings Management
Risk Management
Business, Management and Accounting
4 years ago

Auditor Independence Upheld: Nonaudit Services Pose No Threat to Integrity

Earnings Management
Value-based Management
Corporate Governance
2 views
Business, Management and Accounting
4 years ago

Audit firms' fees impact accrual choices and corporate governance practices.

Earnings Management
Sensitive Surveys
Corruption Causes

The article looks at how auditors' independence might be affected by the importance of their clients and the fees they receive for audit and non-audit services. They used different measures to assess client importance and abnormal accruals as a measure of audit quality. After analyzing data from 1,871 firms in 2000, they found no significant link between abnormal accruals and client importance ratios. This suggests that client importance may not necessarily impact audit quality in a straightforward way.