Do Client Managers Strategically Manage Earnings in Response to Auditors’ Quantitative Materiality Threshold Disclosures?

IF 2.2 4区管理学 Q2 BUSINESS, FINANCE

Accounting Horizons Pub Date : 2024-03-01 DOI:10.2308/horizons-2019-520

Patricia Wellmeyer, Morton Pincus, Lijie Yao

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引用次数: 0

Abstract

Expanded audit report regulation in the United Kingdom requires auditor disclosure of client-specific quantitative materiality thresholds (QMTs). The United States decided against requiring this disclosure, concerned that providing clients with visibility into this important audit input could enhance managers’ ability to manage earnings without detection. Using the U.K. setting, we investigate whether clients strategically leverage their auditors’ QMTs to increase income through undetected earnings management. We examine the association between auditor QMT and client earnings management generally and in client settings where a material qualitative factor in the form of heightened earnings management incentives exists. In our general setting, we find a positive relation between auditors’ lagged and current QMTs and clients’ current-year accruals-based earnings management. We do not find a relation in our heightened earnings management settings, however, suggesting that auditors consider qualitative materiality factors and constrain clients’ auditor QMT-based earnings management. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: M41; M42; M48.

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客户经理是否会根据审计师披露的量化重要性阈值对收益进行战略性管理？

英国扩大了审计报告监管范围，要求审计师披露特定客户的量化重要性阈值 (QMT)。美国决定不要求披露这一信息，因为美国担心让客户了解这一重要的审计意见可能会提高管理者在不被发现的情况下管理收益的能力。我们以英国为背景，调查客户是否会战略性地利用审计师的 QMT 来通过未被发现的收益管理增加收入。我们研究了审计师 QMT 与客户收益管理之间的一般关联，以及在存在以收益管理动机增强为形式的重要定性因素的客户环境中的关联。在一般情况下，我们发现审计师的滞后和当前 QMT 与客户当年基于权责发生制的收益管理之间存在正相关关系。然而，我们在加强收益管理的环境中没有发现这种关系，这表明审计师考虑了定性实质性因素，并限制了客户基于审计师 QMT 的收益管理。数据可用性：数据来源于文中引用的公开资料。JEL 分类：M41; M42; M48.

本文章由计算机程序翻译，如有差异，请以英文原文为准。

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来源期刊

Accounting Horizons BUSINESS, FINANCE-

CiteScore

3.80

自引率

4.00%

发文量

期刊介绍： Accounting Horizons is one of three association-wide journals published by the American Accounting Association AAA. This journal seeks to bridge academic and professional audiences with articles that focus on accounting, broadly defined, and that provide insights pertinent to the accounting profession. The contents of Accounting Horizons, therefore, should interest researchers, educators, practitioners, regulators, and students of accounting.