Online from: 1986
Subject Area: Accounting and Finance
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|Title:||Earnings management practices from the perspective of external and internal auditors: Evidence from Jordan|
|Author(s):||Ahmed A. Al-khabash, (Accounting Department, The University of Jordan, Amman, Jordan), Ali A. Al-Thuneibat, (Accounting Department, The University of Jordan, Amman, Jordan)|
|Citation:||Ahmed A. Al-khabash, Ali A. Al-Thuneibat, (2009) "Earnings management practices from the perspective of external and internal auditors: Evidence from Jordan", Managerial Auditing Journal, Vol. 24 Iss: 1, pp.58 - 80|
|Keywords:||Corporate governance, Earnings, External auditing, Internal auditing, Jordan|
|Article type:||Research paper|
|DOI:||10.1108/02686900910919901 (Permanent URL)|
|Publisher:||Emerald Group Publishing Limited|
Purpose – The purpose of this paper is to provide evidence concerning the existence of earnings management (EM) from the perspective of external and internal auditors in Jordan.
Design/methodology/approach – A specially designed questionnaire was distributed to a sample of both external and internal auditors. To analyze the data of the study,
Findings – The results of the study showed that external auditors believe that management engages significantly only in legitimate EM that either increases or decreases income. However, internal auditors believe that management engages in legitimate practices that only increase income. In both cases, there were significant differences between their views. There is no significant difference between large and small companies regarding EM practices. However, the characteristics of internal governance structure have a significant effect on illegitimate EM, whereas no significant effect was found on legitimate EM.
Practical implications – The paper provides many recommendations, including the need to strengthen and reinforce the internal governance structure of companies and train external and internal auditors regarding EM techniques and measures of detection.
Originality/value – The originality of the study is that it provides evidence about EM practices from the perspective of both external and internal auditor in a developing country.
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