Differences in earnings management between audited and non-audited private manufacturing firms: evidence from Greece
by Vasileios Zisis; John Sorros
International Journal of Accounting, Auditing and Performance Evaluation (IJAAPE), Vol. 11, No. 1, 2015

Abstract: Using the level of discretionary accruals as a proxy of earnings management, we provide empirical results related to the extent of earnings management among a sample of audited and non-audited non-listed manufacturing Greek firms. In accordance with our expectations of the importance and the effect of external auditing on financial reporting, we observe that private firms that are obliged to provide non-audited financial statements report higher (lower) levels of discretionary accruals during upward (downward) earnings management compared to audited private firms. Moreover, we provide evidence consistent with the argument that some non-audited firms that are close to satisfying the criteria of statutory audit manage earnings in a direction that helps them miss the accounting related criteria. However, we fail to detect that external auditing confines the use of abnormal accruals in cases of debt issue. This result also contradicts our expectation that the low level of financial transparency that is driven by the non-publication of interim financial statements will demotivate private firms to manage earnings when raising debt capital.

Online publication date: Mon, 16-Mar-2015

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Accounting, Auditing and Performance Evaluation (IJAAPE):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com