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Characteristics of Internal Auditors and Financial Reporting Quality
Internal auditor characteristics;Internal audit quality;Financial reporting quality;Abnormal accruals
|Issue Date:||2017-11-15 16:02:15 (UTC+8)|
Using a sample of companies listed in Taiwan Stock Exchange and OTC market over the period of 2005-2007, we investigate the effect of characteristics of internal auditors (IAs) on the quality of external financial reporting proxied by performance-matched abnormal accruals. Guided by auditing standards, regulations, and the related literatures, we develop five individual measures-on-the-job experience, percentage of IAs with external audit experience in public accounting firms, percentage of IAs that are professionally certified, training hours, and percentage of IAs with accounting major-and one composite measure for the quality of internal audit function (IAF). The primary research findings indicate that the composite IAF quality measure is negatively (positively) associated with the magnitude of abnormal accruals (negative abnormal accruals). The results imply that the better the IAF quality, the lower the magnitude of earnings management, including reduced downward manipulation of earnings. With respect to individual IAF quality measures, the analyses show that on-the-job experience is associated with more reliable financial reporting behavior. These findings provide incremental contribution to both literatures of earnings management and internal auditing.
|Relation:||會計評論, 64, 113-146|
|Appears in Collections:||[會計評論] 期刊論文|
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