...Jennifer J. Gaver; Steven Utke ABSTRACT We argue that the association between auditor industry specialization and audit quality depends on how long the auditor has been a specialist. We measure audit quality using absolute discretionary accruals, income-increasing discretionary accruals, and book...

... audit difference. We contribute to the literature by demonstrating that when auditors observe REM, their altered perceptions about management can cascade, affecting how they respond to management estimates in unrelated financial statement accounts. audit discretionary accruals dispositional...

... discretionary accruals reported during negative watch are significantly higher than their respective pre- and post-watch levels, after controlling for accrual reversal. Consistent with its opportunistic nature, we find that accrual management increases with issuers' incentives to avoid downgrade, and decreases...

...Daniel W. Collins; Raunaq S. Pungaliya; Anand M. Vijh ABSTRACT Commonly used Jones-type discretionary accrual models applied in quarterly settings do not adequately control for nondiscretionary accruals that naturally occur due to firm growth. We show that the relation between quarterly accruals...

... opaque channels to overstate earnings. Our findings are particularly relevant because managers exhibit a greater propensity for RAM at the time of SEOs, even though RAM is more costly in the long run. JEL Classifications: G14; G31; M4; M41 2016 earnings management discretionary accruals real...

... quality (financial restatements and discretionary accruals) and two measures of external auditor oversight (audit and nonaudit fees). As predicted, we find that audit committee members who are both accounting and industry experts perform better than those with only accounting expertise. We also find...

...James S. Linck; Jeffry Netter; Tao Shu ABSTRACT: Despite a large literature on discretionary accruals, how the use of discretionary accruals impacts corporate financial decisions is not well understood. We hypothesize that a financially constrained firm with valuable projects can use discretionary...

... in discretionary accruals receive significantly less weight than other income components in determining cash compensation. This provides new evidence that not all gains flow through to compensation. We also find that in non-terminal years, managers' compensation is partially shielded from the negative effects...

...William R Baber; Sok-Hyon Kang; Ying Li ABSTRACT This study presents conceptual and empirical analyses of discretionary accrual reversal in the earnings management context. We specifically focus on the extent that income-increasing (decreasing) discretionary accruals initiated in a prior period...