Does continuous auditing enhance the quality of financial reporting? Korean evidence

Jung-Wha Lee, Minjung Kang, Yunsook Oh and Gyungmin Pyo

Asia-Pacific Journal of Accounting & Economics, 2014, vol. 21, issue 3, 284-307

Abstract: This study examines the effects of audit efforts through interim reviews of financial reports. Using Korean data, we specifically investigate the relationship between the number of audit hours worked during the first three quarters and the quality of interim and annual financial reports. Our results show that continuous auditing efforts are negatively associated with interim and annual discretionary accruals ( DA ). Moreover, the results from the positive and negative DA of annual financial reports also support the notion that continuous auditing efforts restrict upward earnings management more than downward earnings management. Overall, our results complement prior research and regulators' assertions by highlighting the importance of continuous audit efforts for interim and annual financial reports.

Date: 2014
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Citations: View citations in EconPapers (4)

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DOI: 10.1080/16081625.2014.884483

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Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

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