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 language | English |
|---|---|
| Pages (from-to) | 815–836 |
| Number of pages | 22 |
| Journal | Journal of Business Ethics |
| Volume | 175 |
| Issue number | 4 |
| Early online date | 13 Nov 2020 |
| DOIs | |
| Publication status | Published - Feb 2022 |
Bibliographical note
The final publication is available at Springer via http://dx.doi.org/10.1007/s10551-020-04672-5Copyright © and Moral Rights are retained by the author(s) and/ or other copyright owners. A copy can be downloaded for personal non-commercial research or study, without prior permission or charge. This item cannot be reproduced or quoted extensively from without first obtaining permission in writing from the copyright holder(s). The content must not be changed in any way or sold commercially in any format or medium without the formal permission of the copyright holders.
Funder
Coventry University (2016-2017) Pump-Prime funding awardKeywords
- Abnormal accruals
- Auditor gender
- Real activities
ASJC Scopus subject areas
- Business and International Management
- General Business,Management and Accounting
- Arts and Humanities (miscellaneous)
- Economics and Econometrics
- Law