Template-Type: ReDIF-Article 1.0
Author-Name:  Hasan Mohammed Bamahros
Author-Workplace-Name: School of Accountancy, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia
Author-Name:   Wan Nordin Wan-Hussin
Author-Workplace-Name: Faculty of Administrative Sciences, University of Aden, Yemen
Author-Name:  Othman Yeop Abdullah
Author-Workplace-Name: Graduate School of Business, Universiti Utara Malaysia,06010 Sintok, Kedah, Malaysia
Author-Email: hasanmohammed@uum.edu.my
Title: Non-Audit Services, Audit Firm Tenure and Earnings Management in Malaysia
Abstract: The main objective of this study is to investigate the association of auditor-provided non-audit services and audit firm tenure with earnings management in Malaysian public listed firms. Two measurements, namely, discretionary current accruals based on the performance-adjusted model developed by Ashbaugh, LaFond and Mayhew (2003) and discretionary total accruals based on the modified Jones model (1991), are employed to estimate the level of earnings management. Our sample consists of 525 companies for financial year 2009. The results suggest that longer audit firm tenure reduces earnings management. However, the magnitude of non-audit fees exacerbates earnings management. Based on the empirical evidence, any attempt to legislate audit firm rotation in Malaysia is unwarranted. Further research is required to move toward a policy resolution on the restriction of non-audit services in Malaysia.
Classification-JEL:
Keywords: earnings management, non-audit fees, audit firm tenure, auditor rotation, Malaysia
Pages: 145–168
Volume: 11
Issue: 1
Year: 2015
File-URL:http://web.usm.my/journal/aamjaf/vol%2011-1-2015/AAMJAF%2011(1)%202015-Art.%207(145-168).pdf
File-Format: Application/pdf
Handle: RePEc:usm:journl:aamjaf01101_145-168