Non-Audit Services, Audit Firm Tenure and Earnings Management in Malaysia

 Hasan Mohammed Bamahros,  Wan Nordin Wan-Hussin and  Othman Yeop Abdullah ()
Additional contact information
 Hasan Mohammed Bamahros: School of Accountancy, Universiti Utara Malaysia, 06010 Sintok, Kedah, Malaysia
 Wan Nordin Wan-Hussin: Faculty of Administrative Sciences, University of Aden, Yemen
 Othman Yeop Abdullah: Graduate School of Business, Universiti Utara Malaysia,06010 Sintok, Kedah, Malaysia

Asian Academy of Management Journal of Accounting and Finance (AAMJAF), 2015, vol. 11, issue 1, 145–168

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.

Keywords: earnings management; non-audit fees; audit firm tenure; auditor rotation; Malaysia (search for similar items in EconPapers)
Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://web.usm.my/journal/aamjaf/vol%2011-1-2015/A ... rt.%207(145-168).pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:usm:journl:aamjaf01101_145-168

Access Statistics for this article

More articles in Asian Academy of Management Journal of Accounting and Finance (AAMJAF) from Penerbit Universiti Sains Malaysia Contact information at EDIRC.
Bibliographic data for series maintained by Journal Division, Penerbit Universiti Sains Malaysia ().