Audit Quality and Accounting Conservatism

Nishtiman H Mohammed,Yazar Adı Yazar Soyadı,Noor Afza Amran,Ku Nor Izah Ku Ismail

doi:10.32602/jafas.2019.17

Nishtiman H Mohammed, Yazar Adı Yazar Soyadı + Show 2 more

Open Access

https://doi.org/10.32602/jafas.2019.17

Copy DOI

Abstract

This objective of this study is to examine the impact of audit quality on accounting conservatism in Turkey. Using three different measures of accounting conservatism, we report that audit quality, in terms of brand name auditor and industry specialist auditor, is positively related to conservatism. Our results hold after controlling for operating cash flow, leverage, firm age and sales growth. Overall, the evidence is consistent that accounting conservatism complements firms in the Turkish business environment that engage with high quality auditors to mitigate agency costs.

Highlights

Despite the availability of several studies, the quality of accounting information remains a subject that requires in-depth investigation in different economic environments (Dechow, Ge, & Schrand, 2010: 67), including in the Turkish context
The purpose of this study is to investigate the influence of audit quality measured by industry specialist auditor and auditor brand name on the level of accounting conservatism in Turkey, in which the institutional setting does not encourage auditors to provide high quality audit
We examine whether audit quality, in terms of brand name auditor and industry specialist auditor, influence the quality of financial reporting, accounting conservatism

Summary

Introduction

Despite the availability of several studies, the quality of accounting information remains a subject that requires in-depth investigation in different economic environments (Dechow, Ge, & Schrand, 2010: 67), including in the Turkish context. The purpose of this study is to investigate the influence of audit quality measured by industry specialist auditor and auditor brand name on the level of accounting conservatism in Turkey, in which the institutional setting does not encourage auditors to provide high quality audit. This study focuses on examining the association between audit quality measured by brand name auditor and industry specialist auditor on accounting conservatism.

Objectives

Results

Conclusion