Ghosh, Saibal (2010): Firm Ownership Type, Earnings Management and Auditor Relationships: Evidence from India. Published in: Managerial Auditing Journal , Vol. 26, No. 4 (2011): pp. 350-369.
Download (192kB) | Preview
Using data on Indian listed companies for 2005, the paper examines how firm ownership relates to auditor choice. More specifically, we test several hypotheses about the links between firm ownership, auditor relationships and earnings management. The results indicate that firms having high discretionary accruals are less likely to be audited by domestic entities. The analysis also suggests that domestic auditors are less likely to be preferred by both foreign and Indian private corporates.
|Item Type:||MPRA Paper|
|Original Title:||Firm Ownership Type, Earnings Management and Auditor Relationships: Evidence from India|
|Keywords:||external auditing; firm ownership; multiple auditors; earnings management; ordered logit; India|
|Subjects:||C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C31 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions ; Social Interaction Models
M - Business Administration and Business Economics ; Marketing ; Accounting ; Personnel Economics > M4 - Accounting and Auditing > M42 - Auditing
G - Financial Economics > G3 - Corporate Finance and Governance > G32 - Financing Policy ; Financial Risk and Risk Management ; Capital and Ownership Structure ; Value of Firms ; Goodwill
|Depositing User:||Saibal Ghosh|
|Date Deposited:||23. Apr 2011 21:56|
|Last Modified:||01. Jan 2016 08:00|
Ali, A., T-Y, Chen and S.Radhakrishnan (2007), “Corporate disclosures by family firms”, Journal of Accounting and Economics Vol.44, No.2, pp.238-86.
Ashbaugh, H., and Warfield, T.D. (2003), “Audits as a corporate governance mechanism: Evidence from the German market”, Journal of International Accounting Research Vol. 2 No.1, pp. 1-21.
Center for Monitoring of the Indian Economy, Prowess Database (Release 2.5), CMIE: Mumbai.
Chan, P., M. Ezzamel and D. Gwilliam (1993), “Determinants of audit fees for quoted UK companies”, Journal of Business Finance and Accounting Vol.20 No.6, pp.765-86.
Chaney, P., M.Faccio and D.Parsley (2010), “The quality of accounting information in politically connected firms”, Journal of Accounting and Economics (forthcoming).
Chung, D.Y., and Lindsay, W.D., (1988), “The pricing of audit services: The Canadian perspective”, Contemporary Accounting Research Vol. 4 No. 1, pp. 19-46.
Collier, P., and A. Gregory (1996), “Audit committee effectiveness and audit effectiveness”, European Accounting Review Vol.5, No.2, pp.177-98.
Craswell, A., Stokes, D.J., and Laughton, J., (2002), “Auditor independence and fee dependence”, Journal of Accounting and Economics Vol. 33 No. 3, pp. 253-75.
Davis, L.R., B.S.Soo and G.M.Trompeter (2009), “Audit tenure and the ability to meet or beat earnings forecasts”, Contemporary Accounting Research Vol26 No.2, pp.517-48.
DeFond, M., (1992), “The association between changes in client firm agency costs and auditor switching”, Auditing: A Journal of Practice and Theory Vol. 11 No. 1, pp. 16-31.
DeFond, M., Francis, J., and Wong, T.J., (2000), “Auditor industry specialization and market segmentation: Evidence from Hong Kong”, Auditing: A Journal of Practice and Theory Vol. 19 No.1, pp. 49-66.
Ding, Y., H. Zhang and J. Zhang (2007), “Private vs state ownership and earnings management: Evidence from Chinese listed companies”, Corporate Governance: An International Review Vol.15 No.2, pp.223-38.
Faccio, M. (2007), “The characteristics of politically connected firms”, Working Paper No.6, Krannert Graduate School of Management, Purdue University: USA (Accessed on September 22, 2010).
Fan, J.P.H., and Wong, T.J., (2005), “Do external auditors perform a corporate governance role in emerging markets? Evidence from East Asia”, Journal of Accounting Research Vol. 43 No. 1, pp. 35-72.
Francis, J. and Wilson, E., (1988), “Auditor changes: A joint test of theories relating to agency costs and auditor differentiation”, The Accounting Review Vol. 63 No. 5, pp. 663 82.
Francis, J.R., (1984), “The effect of audit firm size on audit price: A study of the Australian market”, Journal of Accounting and Economics Vol. 6 No. 1, pp. 133-51.
Ghosh, S. (2007), “External auditing, managerial monitoring and firm valuation: An empirical analysis for India’, International Journal of Auditing Vol. 11 No.1, pp. 1-15.
Hutton, A.P. (2007), “A discussion of corporate disclosures by family firms”, Journal of Accounting and Economics Vol. 44 No.2, pp.287-97.
Jones, J. (1991), “Earnings management during import relief investigation”, Journal of Accounting Research Vol. 29 No. 2, pp. 193-228.
Sandra, W.M.H., and P.H.N.Patrick (1996), “The determinants of audit fees in Hong Kong: An empirical study”, Asian Review of Accounting Vol.4 No.1, pp.32-50.
Sarkar, J., Sarkar, S. and Sen, K. (2008). “Board of directors and opportunistic earnings management: Evidence from India”, Journal of Accounting, Auditing and Finance Vol 23 No.4, pp. 269-86.
Simon, D., Ramanan, R., and Dugar, A., (1986), “The market for audit services in India: An empirical examination”, The International Journal of Accounting Vol. 21 No. 1, pp. 27-35.
Simunic, D.A. (1980), “The pricing of audit services: Theory and evidence”, Journal of Accounting Research Vol.18 No.2, pp.161-90.
Wang, Q., T.J. Wong and L. Xia (2008), “State ownership, institutional environment and auditor choice: Evidence from China”, Journal of Accounting and Economics (forthcoming).
Xie, B., W.N.Davidson and P.J.DaDalt (2003), “Earnings management and corporate governance: The roles of the board and the audit committee”, Journal of Corporate Finance Vol.9 No.3, pp.295-316.