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Busy auditors, ethical behavior, and discretionary accruals quality in Malaysia
journal contribution
posted on 2018-07-01, 00:00 authored by Karen Lai, Andriyawan Sasmita, Ferdinand GulFerdinand Gul, Y B Foo, M HutchinsonThe required professional and ethical pronouncements of accountants mean that auditors need to be competent and exercise due care and skill in the performance of their audits. In this study, we examine what happens when auditors take on more clients than they should, thus raising doubts about their ability to maintain competence and audit quality. Using 2803 observations of Malaysian companies from 2010 to 2013, we find that auditors with multiple clients are associated with lower earnings quality, proxied by total accruals and discretionary accruals. Our results demonstrate that associating client firms’ reported discretionary accruals with individual auditors, rather than their firms or offices, is important in determining audit quality. Moreover, we demonstrate that the disclosure of auditors’ signatures on their reports is useful for assessing auditor quality at the individual level, thus contributing to the debate on the usefulness of having auditor identities on reports.
History
Journal
Journal of business ethicsVolume
150Issue
4Pagination
1187 - 1198Publisher
SpringerLocation
Berlin, GermanyPublisher DOI
ISSN
0167-4544eISSN
1573-0697Language
engPublication classification
C1 Refereed article in a scholarly journal; C Journal articleCopyright notice
2016, SpringerUsage metrics
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