Client importance and earnings quality: an analysis of the moderating

Bum-Jin Park ^[1]
1. [1] Soonchunhyang University
  
  Soonchunhyang University
  
  Corea del Sur
Localización: Revista española de financiación y contabilidad, ISSN 0210-2412, Vol. 44, Nº 4, 2015, págs. 427-457
Idioma: inglés
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Resumen
- 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. While the managerial incentives would lead to lower earnings quality, auditors� incentives would lead to higher earnings quality. My results are in line with client importance being associated with better quality accounting. In particular, I show that auditors� incentives are important and moderate the relation between client importance and accounting quality.