| Summary: | 碩士 === 國立成功大學 === 會計學系碩博士班 === 92 === In recent years, the accounting scandals have focus the public’s eye on earnings quality and on audit quality. For solving the problem, the Sarbanes-Oxley Act of 2002 made several related regulations, and required the audit-firm to mandate rotation in every 5 years. Therefore the paper examines the relation between audit rotation and earnings management.
The two mainly themes of this study are:
1. the relation between the absolute value of earnings management and audit-firm tenure.
2. the relation between the effect of earnings management and audit-firm tenure.
We find a significant negative relation between absolute discretionary accruals and tenure which is consistent with the supporting mandatory rotation. However, there is a significant positive relation between absolute special item and tenure, consistent with the opposing mandatory rotation. Then we divide the effect of earnings management into income-increasing and income-decreasing. The results show that there is a significant negative relation between signed discretionary accrual and tenure. The longer tenure can constrain management to manipulate earnings. On the contrary, there is a significant negative relation between negative special items and tenure. It shows that the longer tenure the more income-decreasing earnings management.
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