Key Audit Matters and Real Earnings Management

• Main Authors: WENG,YA-HSIU, 翁雅琇
• Other Authors: Fan,Hung-Shu
• Format: Others
• Language: zh-TW
• Published: 2018
• Online Access: http://ndltd.ncl.edu.tw/handle/8ha8uy

碩士 === 輔仁大學 === 會計學系碩士班 === 106 === Taking listed firms from 2014 to 2017 as the sample of study, this study explore the relationship between the disclosure of key audit matters and real earnings management. Following Cohen and Zarowin (2010), this study combines three real earnings management indexes of Roychowdhury (2006) - abnormal cash flows from operating activities, abnormal production cost, and abnormal discretionary cost- into one comprehensive index, and use the absolute value to measure real earnings management. The empirical results show that the real earnings management of companies disclosing key audit matters is less than that of companies not disclosing key audit matters, which means that managers of companies disclosing key audit matters will reduce real earnings management. This study carries out some sensitivity tests. The sensitivity tests include (1) replacing the dummy variable of key audit matters with the item counts of key audit matters; (2) replacing the dummy variable of key audit matters with the word counts of key audit matters; (3) multiplying abnormal cash flows from operating activities by minus one and then adding abnormal production cost to produce the second comprehensive index; (4) multiplying the abnormal discretionary cost by minus one and then adding the abnormal PROD to produce the third comprehensive index; (5) the subsamples test for electronics industry and non-electronics industry. The empirical results of these sensitivity tests are similar to the main test.