Is there a trade-off between accrual-based and real earnings management activities in the presence of (fe) male auditors?

Andrews Owusu, Alaa Zalata, Kamil Omoteso, Ahmed Elamer

Research output: Contribution to journalArticlepeer-review

1 Citation (Scopus)

Abstract

Prior research suggests that the presence of high quality auditors (i.e. proxied by audit firm characteristics) constrains accrual-based earnings management, but it inadvertently leads to higher real activities manipulation. We investigate whether such trade-off exists between accrual-based and real earnings management activities in the presence of female or male auditors. We use a sample of UK firms for the period 2009 to 2016 and find that firms audited by female auditors do not resort to a higher level real activities manipulation when their ability to engage in accruals management is constrained. Overall, our results suggest that the benefits of hiring female auditors (i.e. less accrual-based earnings management) are overwhelmingly higher than the costs they might bring to the client firms (i.e. higher real activities manipulation).
Original languageEnglish
Pages (from-to)(In-Press)
JournalJournal of Business Ethics
Volume(In-Press)
Early online date13 Nov 2020
DOIs
Publication statusE-pub ahead of print - 13 Nov 2020

Funder

Coventry University (2016-2017) Pump-Prime funding award

Keywords

  • Abnormal accruals
  • Auditor gender
  • Real activities

ASJC Scopus subject areas

  • Business and International Management
  • Business, Management and Accounting(all)
  • Arts and Humanities (miscellaneous)
  • Economics and Econometrics
  • Law

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