Saif Khan; Hashim Khan; Faisal Khan
Volume 6, Issue 1 , January 2019, , Pages 22-47
Abstract
In this study we have examined the effect of internal audit committee and external auditor quality on accrual-based measures of accounting conservatism, and the benefits of accounting conservatism on firms’ market performance. Moreover, this study also investigates whether the accrual-based conservatism ...
Read More
In this study we have examined the effect of internal audit committee and external auditor quality on accrual-based measures of accounting conservatism, and the benefits of accounting conservatism on firms’ market performance. Moreover, this study also investigates whether the accrual-based conservatism mediate the relationship between audit committee and external auditor quality factors with market-based firms’ performance. A total of 543 sample firms are selected from the Bursa Malaysia for the period from 2004 to 2013. For data analysis, panel data methodology is employed and structural equation modeling (SEM) technique is used to test the developed hypotheses of this study. Results show that audit committee effectiveness and external auditor quality found to be significant with two-year-lagged effect on accrual-based measure of conservatism. Furthermore, accrual-based measure of conservatism mediated the relationship between (a) audit committee effectiveness and market-based firms’ performance, and (b) external auditor quality and market-based firms’ performance. The findings of this study contribute to the signaling theory, agency theory, reputation theory and accounting conservatism literature in emerging economies settings.
Daruosh Foroghi; Moslem Tahmasbi; Mohammad Zamani Bakhtiarvand
Volume 5, Issue 4 , April 2018, , Pages 244-259
Abstract
The present study investigates the relationship between accounting conservatism and earnings management using Benford's Law. In this study, the quantitative index of conservatism (cscore) by Khan & Watts (2009) was considered as the accounting conservatism. Target sample includes 363 listed companies ...
Read More
The present study investigates the relationship between accounting conservatism and earnings management using Benford's Law. In this study, the quantitative index of conservatism (cscore) by Khan & Watts (2009) was considered as the accounting conservatism. Target sample includes 363 listed companies in Tehran Stock Exchange during 1999-2015. Divergence between the actual earning and loss frequencies and Benford' distribution has been taken into account. Chi-square and Z-statistic tests, regards to degrees of conservatism were applied. The results revealed that in companies with low or high levels of conservatism, distribution of earning and lose first to fourth digits follow Benford's law. However the distribution of first and second digits of earning, and first to fourth digits of losses differ from the expected distribution when there is an increase in conservatism. Divergence between the third and fourth digits and expected distribution reduced, when conservatism increases.