Audit Rotation And Earnings Quality: An Analysis Using Discretionary Accruals

Adalene Silvestre, Cristiano Costa and Clóvis Kronbauer
Additional contact information
Adalene Silvestre: Universidade do Vale do Rio dos Sinos
Cristiano Costa: Universidade do Vale do Rio dos Sinos
Clóvis Kronbauer: Universidade do Vale do Rio dos Sinos

Brazilian Business Review, 2018, vol. 15, issue 5, 410-426

Abstract: This article aims to measure the effect of the audit firm rotation on the earnings quality of Brazilian public companies listed on BM&FBOVESPA in the period from 2008 to 2015. We use discretionary accruals as a measure of earnings quality, using two approaches: earnings management and the estimation errors. Results show that audit firm rotation reduced the volume of discretionary accruals and, thus, increases the earnings quality, when these are measured from the perspective of earnings management. However, we do not observe the effect of audit firm rotation on earnings quality when the discretionary accruals are measured from the perspective of accounting estimation errors. The results also show that companies that rotate audit firms voluntarily have greater discretionary accruals and, consequently, lower earnings quality.

Keywords: Audit rotation; Earnings quality; Discretionary accruals; Earnings management; Estimation errors. (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://bbronline.com.br/index.php/bbr/article/download/377/577 Full text (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:bbz:fcpbbr:v:15:y:2018:i:5:p410-426

Access Statistics for this article

Brazilian Business Review is currently edited by Emerson Mainardes

More articles in Brazilian Business Review from Fucape Business School Fucape Business School Brazilian Business Review Av. Fernando Ferrari, 1358, Boa Vista CEP 29075-505 Vitória-ES. Contact information at EDIRC.
Bibliographic data for series maintained by Sarah Lasso ( this e-mail address is bad, please contact ).