The Relationship Between Executive Officers with CPA firm Experiences and Earnings Management

• Main Authors: CHEN, YI-HSIU, 陳怡秀
• Other Authors: HUANG, CHUNG HUEY
• Format: Others
• Language: zh-TW
• Published: 2007
• Online Access: http://ndltd.ncl.edu.tw/handle/27003181483792056431

碩士 === 國立臺北大學 === 會計學系 === 95 === Recent corporate scandals such as Enron have focused the world’s attention on audit firms are independent from their clients and audit quality. The accounting manager and finance supervisor of Enron came from Arthur Anderson. Due to the situation of Enron, the Sarbanes-Oxley Act was signed into law in a short time in 2002 and it involves restriction on revolving door. The study is to investigate the relationship between executive officers with CPA firm experiences and earnings management. Using the Modified Jones Model (Dechow et al. 1995) to calculate abnormal accruals for firms in Taiwan from 2003 to 2005, we separated firms into two industries, electronics and non-electronics industries. The examination involves managers who have worked in CPA firms, who have worked in CPA firms are the same as current external auditor, who have worked in Big4 CPA firms and who have worked in Big4 CPA firms are the same as current external auditor. The results show as follows: 1.For electronics industry, no evidence of increased earnings management by these managers who have worked in CPA firms, who worked in CPA firms are the same as current external auditors, who have worked in Big4 CPA firms and who have worked in Big4 CPA firms are the same as current external auditor. The discretionary accrual was not significantly different from others, the managers do not have the incentive to interfere with the earnings. 2.For non-electronics industry, we found that the discretionary accrual was significantly different between managers that acquired CPA firm experiences and non-CPA firm experiences. Furthermore, the discretionary accrual was significantly different between managers that have Big4 CPA firm experiences and non-Big4 firm’s managers. Our findings showed that managers with CPA firm experiences have the intention to interact with earnings management.