Effects of Audit Quality on Earnings Management and Cost of Equity Capital: Evidence from China

CORC > 厦门大学 > 管理学院－已发表论文

	Effects of Audit Quality on Earnings Management and Cost of Equity Capital: Evidence from China
	Chen, Hanwen ; Chen, Jeff Zeyun ; Lobo, Gerald J. ; Wang, Yanyan ; Chen HW(陈汉文) ; Wang YY(王艳艳)
刊名	http://dx.doi.org/10.1111/j.1911-3846.2011.01088.x
	2011
关键词	CORPORATE GOVERNANCE INSTITUTIONAL ENVIRONMENT BIG 4 FIRMS INFORMATION MARKET RISK PERFORMANCE SERVICES ACCRUALS
英文摘要	We examine the effects of audit quality on earnings management and cost of equity capital for two groups of Chinese firms: state-owned enterprises (SOEs) and non-state-owned enterprises (NSOEs). The differences in the nature of the ownership, agency relations and bankruptcy risks lead SOEs to have weaker incentives than NSOEs to engage in earnings management. As a result, the effect of audit quality in reducing earnings management will be greater for NSOEs than for SOEs. In addition, investors' pricing of information risk as reflected in the cost of equity capital will be more pronounced for NSOEs than for SOEs with high and low audit quality. We find empirical evidence consistent with these hypotheses. Our findings indicate that (1) while high-quality auditors play a governance role in China, that role is limited to a subset of firms, and (2) even under the same legal jurisdiction, the effects of audit quality (in the form of lower earnings management and cost of equity capital) vary across firms with different ownership structures. Our study extends prior research by focusing on the economic consequences of SOEs' and NSOEs' auditor choices and underscores the importance of controlling for ownership type when conducting audit research.
语种	英语
出版者	CONTEMP ACCOUNT RES
内容类型	期刊论文
源URL	[http://dspace.xmu.edu.cn/handle/2288/87635]
专题	管理学院－已发表论文
推荐引用方式 GB/T 7714	Chen, Hanwen,Chen, Jeff Zeyun,Lobo, Gerald J.,et al. Effects of Audit Quality on Earnings Management and Cost of Equity Capital: Evidence from China[J]. http://dx.doi.org/10.1111/j.1911-3846.2011.01088.x,2011.
APA	Chen, Hanwen,Chen, Jeff Zeyun,Lobo, Gerald J.,Wang, Yanyan,陈汉文,&王艳艳.(2011).Effects of Audit Quality on Earnings Management and Cost of Equity Capital: Evidence from China.http://dx.doi.org/10.1111/j.1911-3846.2011.01088.x.
MLA	Chen, Hanwen,et al."Effects of Audit Quality on Earnings Management and Cost of Equity Capital: Evidence from China".http://dx.doi.org/10.1111/j.1911-3846.2011.01088.x (2011).