ABSTRACT

If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is twofold. First, it investigates whether high free-cash-flow companies with low-growth opportunities (surplus free cash flow (SFCF)) are associated with income-increasing earnings management. Second, it scrutinizes the effect of audit quality on the income-increasing earnings management and SFCF and earnings management relationship. Design/methodology/approach -This study focusses on companies listed on the Bursa Efek Indonesia, Bursa Malaysia, and Stock Exchange of Singapore over the period 2005-2010. The cross-sectional modified Jones (1991) model is used to measure discretionary accruals (DACs) (the proxy for earnings management). SFCF is an indicator variable with firm j scored 1 if their retained cash flows is above the sample median and their price to book ratio is below the sample median in fiscal year t; otherwise is scored 0. Audit quality refers to the quality of the auditor. Indicator variable with firm j scored one (1) if their auditor in fiscal year t is a Big 4 audit firm; otherwise scored zero (0). Findings -The empirical result provides supports for the hypothesis suggesting that company managers with high free cash flow and low-growth opportunities tend to use their discretion to select income increasing accounting choices. Investigation based on each of the three-country sub samples indicates that the relationship between SFCF and managers' income-increasing accounting choice is applicable in Malaysia, partially applicable in Singapore but it is not valid in Indonesia. In addition, the statistical analyses based on all sample and country sub-samples indicate that audit quality has negative relationships with earnings management measure. The result of univariate analysis suggests that mean of DACs in companies audited by Big 4 auditors are significantly smaller compared to that of in non-Big 4 audited firms. However, the results of multivariate analysis suggest that audit quality has only partially significant association with earnings management. Moreover, this study finds that Big 4 auditors insignificantly moderate the SFCF-earnings management relationships. Practical implications -This research may have implications for ...

Purpose The purpose of this paper is to examine the effect of culture and audit quality on managers’ decisions regarding accounting accruals. It focuses on companies experiencing excessive free cash flow, as these companies have been associated with an agency problem. Design/methodology/approach This study measures the magnitude of discretionary accruals as a proxy for earnings management using the cross-sectional modified Jones model. Excessive free cash flow is scrutinized by the method used by Chung et al. (2005). Listed companies in nine countries in the Asia-Pacific region are represented in this study. The statistical analyses are used to examine the influence of cultural aspect, the role of external monitoring by high-quality auditors and the earnings management practice in the companies with excessive free-cash-flow. Findings The empirical results presented in this paper provide support for the proposition that managers of companies with excessive free-cash-flow will make investment decisions that are not always in the best interest of the shareholders and use accounting discretion to increase reported earnings. This study provides empirical evidence that these companies have been associated with an agency problem and the role of external auditor persists in a setting, where cultural differences prevail in across countries. Practical implications In cross-border trade and investment, the findings provide the opportunity to exploit a setting, where cultural differences prevail, whereas other potentially influential variables, including the role of external monitoring by high-quality auditors, are relatively constant across countries. Originality/value Previous studies (Leuz et al., 2003; and Enomoto et al., 2015) examine factors influencing earnings management internationally have concentrated on legal institutions and investor protection. Han et al. (2010) completed a cross-country study on the effects of national culture on earnings management. This study focuses on companies across countries experiencing with excessive free cash flow and examines the cultural aspect and the effectiveness of external monitoring by high-quality auditors operating in different countries in mitigating managerial opportunism.

This study aims to empirically test the effects of auditor rotation and auditor tenure on an auditor's independence in companies listed on the Indonesia Stock Exchange during the years 2002-2010. This study using logistic regression estimation technique. The results show that, statistically, the auditor's tenure has significant negative effects on the auditor's independence, measured by the tendency to give a 'going concern' opinion. Furthermore, the results also show significant differences between the effects of short and long term tenures on the auditors' independence. Auditor rotation has significant positive effects on the auditors' independence. Abstrak: Penelitian ini bertujuan untuk menguji secara empiris pengaruh rotasi auditor dan masa kerja auditor terhadap independensi auditor pada perusahaan yang listed di Bursa Efek

Reduced auditor independence and the rise of corporate accounting manipulations have caused trust of the users in audited financial statements to begin to decline, so users of financial statements are questioning whether public accountants are independent parties. This research issue is related to the Decree of the Minister of Finance No. 17 in 2008 about public accountant services. Giving attestation services, in the form of financial statements about an entity, are conducted by the audit firm for no longer than 6 consecutive fiscal years and by a public accountant for 3 consecutive fiscal years at the longest. The purpose of this research is to examine empirically the influence of auditor tenure on audit quality. Auditor tenure is measured as the length of the auditor-client relationship. Audit quality is measured by the propensity of auditors to issue a going-concern opinion. This study uses a sample of firms listed on the Indonesia Stock Exchange during the 2003-2008 period. Research analysis uses logit model to measure the effect of auditor tenure on the auditors' propensity to publish a going-concern opinion. The hypothesis which states that the length of auditor tenure influences negatively the propensity of auditors to issue a going-concern opinion is statistically supported. This research is expected to provide empirical evidence about the importance of limiting of the auditor-client relationship.Abstrak: Berkurangnya independensi auditor dan maraknya manipulasi akuntansi korporat membuat kepercayaan para pemakai laporan keuangan auditan mulai menurun, sehingga para pemakai laporan keuangan mempertanyakan eksistensi akuntan publik sebagai pihak independen. Isu penelitian ini berkaitan dengan peraturan Menteri Keuangan No. 17 tahun 2008 tentang jasa akuntan publik. Pemberian jasa atestasi atas laporan keuangan dari suatu entitas yang dilakukan oleh Kantor Akuntan Publik paling lama untuk 6 (enam) tahun buku berturut-turut dan oleh seorang Akuntan Publik paling lama untuk 3 (tiga) tahun buku berturut-turut.Tujuan penelitian ini adalah untuk menguji secara empiris pengaruh tenur auditor terhadap kualitas audit. Tenur auditor diukur dengan lamanya hubungan auditor dengan klien. Kualitas audit diukur dengan kecenderungan auditor mengeluarkan opini going concern. Penelitian ini menggunakan sampel perusahaan yang terdaftar di Bursa Efek Indonesia perioda [2003][2004][2005][2006][2007][2008]. Analisis penelitian Junaidi et al. 304Keywords: audit quality; auditor tenure; going concern; reputation menggunakan model logit untuk mengukur pengaruh tenur auditor pada kecenderungan auditor mengeluarkan opini going concern. Hipotesis yang menyatakan bahwa terdapat pengaruh negatif tenur auditor pada kecenderungan auditor mengeluarkan opini going concern secara statistik didukung. Penelitian ini diharapkan dapat memberikan bukti empiris tentang pentingnya pembatasan hubungan auditor dengan klien.