Professional Auditing Research

Professional Auditing Research

Examining relationship between the use of busy auditors and earnings management, emphasizing the role of the audit committee

Document Type : Original Article

Authors
ameneh bazrafshan 1
nafiseh jafarzadeh 2
1 Associate Professor. Department of Accounting, Imam Reza International University, Mashhad, Iran
2 MSc.of Accounting, Imam Reza International University, Mashhad, Iran
10.22034/jpar.2024.2027882.1312
Abstract
In theory, busy auditors can influence the earnings management of companies. However, there are competing theories regarding the way of this effect (positive effect versus negative effect). Therefore, the present study first examines empirically the relationship between the employment of busy auditors and profit management, and secondly evaluates the moderating role of the audit committee in the relationship between busy auditors and profit management. In this regard, the number of 156 companies admitted to the Tehran Stock Exchange in the period of 2018-2023 is selected as the research sample. The results of the research hypotheses test show that there is a positive and significant relationship between the use of busy auditors and the management of accrual and actual earnings. In addition, the findings indicate that the independence of the audit committee and the expertise of the audit committee do not have a significant effect on the relationship between the use of busy auditors and real earnings management. In companies that are audited by busy auditors, the amount of accrual and actual earnings management is higher.This research shows which of the competing arguments or theories regarding the relationship between busy auditors and earnings management has empirical superiority in Iran. Also, the current research evaluates the moderating role of audit committees regarding the relationship between busy auditors and earnings management.
Keywords
busy auditors
accrual earnings management
real earnings management
audit committee independence
audit committee expertise

Subjects

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