Audit opinion and earnings management: Empirical evidence from Vietnam
| Autor: | Hoai Nam Tran, Thanh Nga Doan, Thu Trang Ta, La Soa Nguyen, Duc Cuong Pham |
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| Jazyk: | angličtina |
| Rok vydání: | 2021 |
| Předmět: |
Economics and Econometrics
Auditor's report Index (economics) discretionary accruals business.industry Strategy and Management Vietnamese listed companies Accounting Earnings management modified audit opinion Big 4 audit firms HG1-9999 Business and International Management business Empirical evidence Publication Finance earnings management |
| Zdroj: | Investment Management & Financial Innovations, Vol 18, Iss 4, Pp 131-140 (2021) |
| ISSN: | 1812-9358 1810-4967 |
| Popis: | This paper aims to explore the interaction between earnings management and audit opinions in the context of Vietnam – an emerging country. For this purpose, two regressions were developed with sample consists of 1,294 firm-years in the period from 2018 to 2020. The first regression model uses Audit Opinion as dependent variable, Discretionary Accruals (DA) as independent variable, and other 8 controlling variables. The results demonstrate that the Discretionary Accruals influence audit opinion, significantly at 0.1 level in the study year. This means the auditor’s probability of issuing modified opinion is positively associated with earnings management and with the attendance of a Big 4 audit companies. Another regression model tests influence of auditor size (measured by Opinion of Auditor) on the interaction between management of earnings and audit opinion (measured by Discretionary Accruals) as independent variable, and other 10 controlling variables. Surprisingly, this model is not statistically significant and this confirms that the appearance of a Big 4 audit companies does not significantly affect the nexus between profit management and audit opinion in the case of Vietnamese listed companies. The results suggest that Big 4 audit firms tend to have higher requirements for the true-and-fair information on the client’s financial statements and often have a tendency to issue modified opinions when the financial statements have material errors, or it is impossible to collect sufficient audit evidence. This finding may enhance the decision-making process of users in various circumstances. AcknowledgmentsThis paper is funded by the National Economics University (NEU), Vietnam. The authors thank anonymous reviewers for their contributions and the NEU for supporting this study. |
| Databáze: | OpenAIRE |
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