دانلود رایگان مقاله انگلیسی اثر متقابل بین معاملات با اشخاص وابسته و مدیریت سود: نقش کیفیت حسابرسی - الزویر 2017

Abstract

Related Party Transactions (RPTs) are considered a potential tool for shareholder wealth expropriation as they offer opportunities to transfer wealth between the firm and related parties. While considerable evidence has reported on the negative consequences of RPTs (declines in shareholder wealth, lowered accounting quality and an increased likelihood of financial fraud), studies examining how RPTs may be used in earnings management are relatively rare. Consequently, we investigate whether RPTs are associated with real or accrual earnings management or used as a third alternative to manage reported earnings. Our study employs a sample of firms listed on the Athens Stock Exchange during the period between 2009 and 2014. Our results indicate that, on average, real earnings management and RPTs appear to be used as substitutes. However, additional tests show that this substitution is not significant if the firm is audited by one of the Big 4 auditors.Contrarily, we do not find any significant association between accrual earnings management and RPTs. Our evidence adds to understanding about the interplay between RPTs and earnings management and how audit quality can affect the relationships investigated.

7. Conclusion

We investigate how firms use RPTs to manage their reported earnings. Some prior evidence indicates that RPTs may be considered a tool to manipulate reported earnings. However, it is unclear whether RPTs are used independently to manage earnings or maybe used in conjunction with other techniques to manipulate accruals or real activities of a firm. In the latter instance, we would conclude that RPTs are likely being used to indirectly manage earnings. A third possibility is that they reflect normal transactions conducted for legitimate commercial purposes.

To address the issue, we investigate the association between RPTs and both real and accrual-based earnings management indicators for firms listed on the ASE. Following Zang (2012) we measure accrual earnings management using discretionary accruals (Jones, 1991) and real earnings management by discretionary cash flow from operations, discretionary production costs and discretionary expenses (Roychowdhury, 2006). The results indicate that RPTs are more likely to be used as a standalone tool to manage earnings and act as a substitute for real earnings management.

The results show no systematic relationship between RPTs and accrual-based earnings management. Second, our results show that the substitution effect is only present in firms audited by a non-Big 4 auditor. The results are robust to alternative specifications of our models. In our robustness tests, we try to rule out the possibility that our results are biased due to our research design choices.