Prawitt, Douglas F.
[VerfasserIn]
;
Smith, Jason L.
[Sonstige Person, Familie und Körperschaft];
Wood, David A.
[Sonstige Person, Familie und Körperschaft]
Anmerkungen:
In: The Accounting Review, Vol. 84, No. 4, pp. 1255-1280, 2009
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments September 11, 2008 erstellt
Beschreibung:
Internal auditors often perform work that is relevant to their host entities' financial reporting processes, yet little research attention has focused on the effects of internal auditing on companies' external financial reporting. Using a unique and previously unavailable data set, we investigate the relation between internal audit function (IAF) quality and earnings management. We measure IAF quality using a composite measure comprising six individual components of IAF quality based on SAS No. 65, which guides external auditors in assessing the quality of an IAF with respect to its role in financial reporting. Earnings management is measured using two separate proxies, (1) abnormal accruals and (2) the propensity to meet or barely beat analysts' earnings forecasts. We find evidence that IAF quality is associated with a moderation in the level of earnings management as measured by both proxies