| Summary: | 碩士 === 輔仁大學 === 會計學系碩士班 === 95 === Because the auditor’s bargaining power plays an important role in the financial audit, this study is aimed at examining the effect of auditor relative bargaining power on client’s earnings management behavior. The present study estiblishs a auditor’s bargaining power measure, which is based on the Chen et al. (2007) Fuzzy Inference model to proxy the auditor’s bargaining power against his/her client. This thesis adopts the discretionary accruals of the performance-controlled modified cross-sectional Jones model, proposed by Kothari et al. (2005), to catch the earnings management behaviors. It is expected that the auditors with stronger bargaining power have lesser incentives to compromise independence, and therefore, constrain more earnings management behaviors. Furthermore, this study conjectures that the auditors of non-electronics firm have stronger bargaining powers, in comparion with the bargaining powers of the auditors of non-electronics firm, that restrain more earnings management behaviors. The sample consists of listed companies (including TSE listed firms and OTC listed firms) from 2000 to 2005.
The empirical results are as follows.
Firstly, the empirical results show that the absolute discretionary accruals are significantly negative-associated with the auditor’s bargaining power measures. The first hypothesis gains preliminary support. Furthermore, this same result is also observed in the positive-discretionary accruals subsample test except the negative-discretionary accruals subsample test. This evidence suggests that the auditors wtih stronger bargaining power limit more income-increase earnings manipulation behaviors but ignore income-decrease earnings manipulation behaviors. Secondly, the empirical results evidence that the auditors of non-electronics firm have stronger bargaining powers, in comparion with the bargaining powers of the auditors of non-electronics firm, that restrain more earnings management behaviors.
These results are robust in various discretionary accrual measurement tests and various auditor’s bargaining power measure tests.
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