The aim of this research is to study the impact of auditor reputation and audit opinion on earnings management in French banks. This article used a sample of 162 French banks over the period from 2005 to 2012. By usin...The aim of this research is to study the impact of auditor reputation and audit opinion on earnings management in French banks. This article used a sample of 162 French banks over the period from 2005 to 2012. By using three different tests （loss-avoidance, just-meeting-or-beating prior year＇s earnings, and abnormal loan loss provision）, the findings of this paper show that both high auditor reputation and qualified audit opinion constrain earnings management to avoid loss or to just meet or beat prior year＇s earnings in banks. In separate tests related to earnings management through abnormal loan loss provisions, the paper also finds that high auditor reputation constrains earnings management. Qualified audit opinion has a negative but non-significant effect on abnormal loan loss provisions.展开更多
This research examines whether ＂the paradox of auditor reputation＂ exists in China＇s private debt market. Two types of hypotheses are developed to explain the ＂paradox＂ in terms of ownership differences. Our find...This research examines whether ＂the paradox of auditor reputation＂ exists in China＇s private debt market. Two types of hypotheses are developed to explain the ＂paradox＂ in terms of ownership differences. Our findings suggest： （1） by retaining big name auditors, non-state-owned enterprises （non-SOEs） significantly reduce the cost of debt and lower financial constraints; （2） For the non-SOEs, the effect of auditor reputation on the cost of debt and financial constraints declines over time due to the accumulation of these firms＇ own reputation; （3） SOEs are more sensitive to the interest rate of bank loans than their counterparts, implying their stronger bargaining power when negotiating with potential creditors than non-SOEs due to their government connections. However, SOEs＇ government connections weaken the informational role of auditors and firm reputation on signaling debt market; and （4） Corporate governance is taken into consideration by creditors as an important indicator of solvency. Further investigation demonstrates that after controlling for firm size, operating cash flow, profitability and leverage ratio, the possibility of hiring big name auditors by the younger and median-aged group of non-SOEs is considerabls, higher than ＂elder＂ non-SOEs. Moreover, poor-performing SOEs have greater incentives to make use of their government connections in their bargaining for lower debt cost, as compared with their well-performing peers.展开更多
文摘The aim of this research is to study the impact of auditor reputation and audit opinion on earnings management in French banks. This article used a sample of 162 French banks over the period from 2005 to 2012. By using three different tests （loss-avoidance, just-meeting-or-beating prior year＇s earnings, and abnormal loan loss provision）, the findings of this paper show that both high auditor reputation and qualified audit opinion constrain earnings management to avoid loss or to just meet or beat prior year＇s earnings in banks. In separate tests related to earnings management through abnormal loan loss provisions, the paper also finds that high auditor reputation constrains earnings management. Qualified audit opinion has a negative but non-significant effect on abnormal loan loss provisions.
文摘This research examines whether ＂the paradox of auditor reputation＂ exists in China＇s private debt market. Two types of hypotheses are developed to explain the ＂paradox＂ in terms of ownership differences. Our findings suggest： （1） by retaining big name auditors, non-state-owned enterprises （non-SOEs） significantly reduce the cost of debt and lower financial constraints; （2） For the non-SOEs, the effect of auditor reputation on the cost of debt and financial constraints declines over time due to the accumulation of these firms＇ own reputation; （3） SOEs are more sensitive to the interest rate of bank loans than their counterparts, implying their stronger bargaining power when negotiating with potential creditors than non-SOEs due to their government connections. However, SOEs＇ government connections weaken the informational role of auditors and firm reputation on signaling debt market; and （4） Corporate governance is taken into consideration by creditors as an important indicator of solvency. Further investigation demonstrates that after controlling for firm size, operating cash flow, profitability and leverage ratio, the possibility of hiring big name auditors by the younger and median-aged group of non-SOEs is considerabls, higher than ＂elder＂ non-SOEs. Moreover, poor-performing SOEs have greater incentives to make use of their government connections in their bargaining for lower debt cost, as compared with their well-performing peers.
