Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)


Quarterly Earnings Management: the Role of Audit Quality

Author(s): Nadia Sbei Trabelsi

This paper used data of companies listed in United Arab Emirates stock markets from 2011 to 2019 to investigate whether the magnitude of quarterly earnings management varies across quarters. Additional tests were conducted to examine the effect of audit quality on the level of earnings management. Multivariate regression analysis was employed to test the sensitivity of earnings management to quarters and to audit quality. Overall, results indicate a higher level of earnings manipulation during the first and the fourth quarter. During the first quarters mangers might have a discretionary attitude to avoid losses or decline in earnings. A reversing effect was detected in the fourth quarter. Firms audited by a big 4 auditors are less likely to manage their earnings. High quality audit seems reducing the manipulation of earnings.

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