The impact of the quality of the external audit on real earnings management: An applied study on a sample of companies listed in the Iraq Stock Exchange

Abstract

The research aims to demonstrate the impact of the high quality of external audit on the management of real profits in the Iraqi environment. For the period from (2011-2018). On a sample of (12) Iraqi industrial companies. The quality of the external audit was measured by the rotation of the external auditor. While the management of real profits was measured through the (Roychowdhury, 2006) model. Where the high quality of external audit is an important element to reduce the management of real profits, and this is what prompted international organizations for the audit profession to pay attention to the quality of external audit and how to achieve it by setting international auditing standards that aim to achieve an audit process. High quality. The study reached a set of conclusions, the most important of which is the existence of a negative and significant effect of the quality of external audit in managing real profits. As for the most important recommendations, company managers should stay away from profit management activities. Especially real. Although it has a positive effect on the value of the company in the short run. However, it has a very negative impact on the company's future value. Thus, company directors and auditors were exposed to the judiciary and the issue.