Title: Auditor brand name, industry specialisation, and earnings management: evidence from Taiwanese companies

Authors: Ken Y. Chen, Shan-Ying Wu, Jian Zhou

Addresses: National Cheng Kung University, College of Management, Tainan 701, Taiwan. ' College of Management, Kuan Shan University of Technology, Tainan, Taiwan. ' School of Management, SUNY at Binghamton, P.O. Box 6000, Binghamton, NY 13902-6000, USA

Abstract: We investigate the relationship between auditor brand name, industry specialisation, and earnings management as measured by discretionary accruals for a sample of listed companies in Taiwan, where the litigation risk against auditors is much less than the risk in the USA. We find that the use of Big 5 auditors is related to less earnings management in Taiwan. We also find that industry specialist auditors are related to less income increasing earnings management, which, to our knowledge, has not been demonstrated by any audit quality and earnings management studies in Taiwan.

Keywords: industry specialisation; earnings management; audit quality; auditing; Taiwan; auditor brand name; auditor specialisation.

DOI: 10.1504/IJAAPE.2006.010301

International Journal of Accounting, Auditing and Performance Evaluation, 2006 Vol.3 No.2, pp.194 - 219

Published online: 13 Jul 2006 *

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