Auditor awareness of earnings management

Evangelos Koumanakos, Antonios Georgopoulos and Costas Siriopoulos ()

International Journal of Accounting, Auditing and Performance Evaluation, 2008, vol. 5, issue 1, 50-65

Abstract: This study examines whether auditor reporting in Greece is associated with different levels of discretionary accruals – a common proxy for earnings management. We focus our research on 91 cases of quoted companies on the Athens Stock Exchange (ASE). These are listed companies that were asked in year 2003 by the Athens Stock Exchange Board to quantify the effects of the qualifications made by their external auditors and post them in the ASE website. Those auditors' reports were referred to published financial statements of the year 2002. By employing some variations of the traditional Jones-discretionary accrual model, we document that several major Greek companies in financial distress with qualified audit opinions do appear to manipulate their reported earnings by exploiting the weaknesses of the Greek GAAP.

Keywords: auditing; earnings management; financial distress; Greece; qualified opinions; auditor awareness; Greece; auditor reporting; discretionary accruals; Athens Stock Exchange; Greek GAAP. (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (4)

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