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Auditor independence, auditor specialisation and earnings management: further evidence from Singapore

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Authors
Rusmin, Rusmin
Van Der Zahn, J-L.
Tower, Greg
Brown, Alistair
Date
2006
Type
Journal Article

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Rusmin, Rusmin and Van Der Zahn, J-L.W. and Tower, Greg and Brown, Alistair. 2006. Auditor independence, auditor specialisation and earnings management: further evidence from Singapore. The International Journal of Accounting, Auditing and Performance Evaluation. 3 (2): pp. 166-193.
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The International Journal of Accounting, Auditing and Performance Evaluation
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Curtin Business School
School of Accounting
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Copyright © 2006 Inderscience Enterprises Limited. All rights reserved.

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Abstract

This study uses data from 298 Singapore publicly listed firms to examine the association between earnings management and two audit value attributes: auditor independence and auditor specialisation. We find firms engaging a specialist auditor had significantly lower levels of abnormal accruals than those using non-specialists. This supports the view industry specialisation better enables an auditor to constrain a client's earnings management. Our findings indicate the lack of a universal association between audit value attributes and earnings management. Results imply recent action of Singapore policymakers to strengthen rules governing audit independence as related to non-audit services may have been premature.