What is it about?
I examine the effects of client importance on accounting quality. In particular, I analyse whether these effects are moderated by managerial incentives to engage in earnings management (like benchmark beating) or by auditors’ incentives to maintain their reputation and avoid litigation.
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Why is it important?
While the managerial incentives would lead to lower earnings quality, auditors’ incentives would lead to higher earnings quality.
Perspectives
These results extend prior research by providing novel evidence related to the association between client importance and earnings management. Specifically, this paper is the first to provide empirical evidence that the association between client importance and earnings management varies depending on the relative effect of managerial versus auditors’ incentives.
Professor Bumjin Park
Soonchunhyang University
Read the Original
This page is a summary of: Client importance and earnings quality: an analysis of the moderating effect of managerial incentives for target beating versus auditors’ incentives to avoid reputational losses and litigation, Spanish Journal of Finance and Accounting / Revista Española de Financiación y Contabilidad, August 2015, Taylor & Francis,
DOI: 10.1080/02102412.2015.1076634.
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