Influence of IFRS Adoption on Earnings Management Through the Moderating Role of Audit Quality: Evidence from KSA and UAE
Year: 2025
Type: article
Abstract: The purpose of the study was to explore influence of IFRS adoption on earnings management (EM) and the role of audit quality (AQ), represented by big 4 audit firms.Also, the role of AQ as a moderator in the association between IFRS and EM.The financial data of 97 non-financial listed firms were taken from DataStream and audited with the Saudi Stock Exchange and the Emirates Stock Exchange for the period 2011-2021.The financial data was analyzed using Kothari et al., (2005) model regarding to AEM and Roychowdhury, (2006) with regard to REM.The results indicated a negative significant effect that IFRS contributes to reduce AEM and REM.Besides, audit quality had the same influence on EM.The findings, furthermore, revealed a positive insignificant relationship of the moderating role of AQ which meant that the big4 firms did not anticipate to reduce the EM.This might be due to a lack of local financial and accounting professionals in line with the requirements of major-4 audit companies or the higher costs when relying on big 4 auditing firms.This study opens valuable insights to relevant parties, including government bodies, local standard-setters, shareholders, and emerging markets that have a similar environment.
Source: Management and Accounting Review
Institutions: University of Anbar, University of Sfax
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4410222014