An Investigation of the Effect of Audit Partner’s Disclosure on Earnings Management for Egyptian Companies

Mohamed Khamis Zaytoun; Mohamed Mahmoud Elhousy

doi:doi:10.11648/j.jfa.20231101.11

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An Investigation of the Effect of Audit Partner’s Disclosure on Earnings Management for Egyptian Companies

Mohamed Khamis Zaytoun, Mohamed Mahmoud Elhousy

Published in Journal of Finance and Accounting (Volume 11, Issue 1)

Received: 8 December 2022 Accepted: 29 December 2022 Published: 10 January 2023

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Abstract

International Auditing and Assurance Standards Board (IAASB), Public Company Accounting Oversight Board (PCAOB) and European Union (EU) have made significant efforts to restore the credibility, information, accuracy, and independence of the audit report by requiring disclosure of the audit partner's name and/or the audit partner's signature on the audit report. This research aims to study and examine the relationship between the audit partner's voluntary disclosure and earnings management. In precise, examine whether the audit partner's disclosure leads to lower level of earnings management. The research has also aimed for examining the impact of the audit partner quality on the aforementioned relationship, using a sample from the companies listed in the Egyptian Stock Exchange for the period starting from 2014 to 2018. The results indicated that: (1) there is a statistically significant negative effect for the audit partner disclosure on the absolute value of earnings management proxied by Miller Ratio; which in turn means that the audit partner disclosure increases the earnings quality. (2) There is no effect for the audit partner quality proxied by his industrial specialization on the relationship between audit partner disclosure and the earnings quality. The findings of this research have important consequences for regulators in determining whether the actual effects of a disclosure requirement are as expected, for investors in reducing costs of obtaining information, and for audit committees in making better decisions when hiring auditors.

Published in	Journal of Finance and Accounting (Volume 11, Issue 1)
DOI	10.11648/j.jfa.20231101.11
Page(s)	1-11
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2023. Published by Science Publishing Group

Keywords

Audit Partner Disclosure, Earnings Management, Audit Partner Quality

References

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APA Style

Mohamed Khamis Zaytoun, Mohamed Mahmoud Elhousy. (2023). An Investigation of the Effect of Audit Partner’s Disclosure on Earnings Management for Egyptian Companies. Journal of Finance and Accounting, 11(1), 1-11. https://doi.org/10.11648/j.jfa.20231101.11

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ACS Style

Mohamed Khamis Zaytoun; Mohamed Mahmoud Elhousy. An Investigation of the Effect of Audit Partner’s Disclosure on Earnings Management for Egyptian Companies. J. Finance Account. 2023, 11(1), 1-11. doi: 10.11648/j.jfa.20231101.11

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AMA Style

Mohamed Khamis Zaytoun, Mohamed Mahmoud Elhousy. An Investigation of the Effect of Audit Partner’s Disclosure on Earnings Management for Egyptian Companies. J Finance Account. 2023;11(1):1-11. doi: 10.11648/j.jfa.20231101.11

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@article{10.11648/j.jfa.20231101.11,
  author = {Mohamed Khamis Zaytoun and Mohamed Mahmoud Elhousy},
  title = {An Investigation of the Effect of Audit Partner’s Disclosure on Earnings Management for Egyptian Companies},
  journal = {Journal of Finance and Accounting},
  volume = {11},
  number = {1},
  pages = {1-11},
  doi = {10.11648/j.jfa.20231101.11},
  url = {https://doi.org/10.11648/j.jfa.20231101.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20231101.11},
  abstract = {International Auditing and Assurance Standards Board (IAASB), Public Company Accounting Oversight Board (PCAOB) and European Union (EU) have made significant efforts to restore the credibility, information, accuracy, and independence of the audit report by requiring disclosure of the audit partner's name and/or the audit partner's signature on the audit report. This research aims to study and examine the relationship between the audit partner's voluntary disclosure and earnings management. In precise, examine whether the audit partner's disclosure leads to lower level of earnings management. The research has also aimed for examining the impact of the audit partner quality on the aforementioned relationship, using a sample from the companies listed in the Egyptian Stock Exchange for the period starting from 2014 to 2018. The results indicated that: (1) there is a statistically significant negative effect for the audit partner disclosure on the absolute value of earnings management proxied by Miller Ratio; which in turn means that the audit partner disclosure increases the earnings quality. (2) There is no effect for the audit partner quality proxied by his industrial specialization on the relationship between audit partner disclosure and the earnings quality. The findings of this research have important consequences for regulators in determining whether the actual effects of a disclosure requirement are as expected, for investors in reducing costs of obtaining information, and for audit committees in making better decisions when hiring auditors.},
 year = {2023}
}

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TY  - JOUR
T1  - An Investigation of the Effect of Audit Partner’s Disclosure on Earnings Management for Egyptian Companies
AU  - Mohamed Khamis Zaytoun
AU  - Mohamed Mahmoud Elhousy
Y1  - 2023/01/10
PY  - 2023
N1  - https://doi.org/10.11648/j.jfa.20231101.11
DO  - 10.11648/j.jfa.20231101.11
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 1
EP  - 11
PB  - Science Publishing Group
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UR  - https://doi.org/10.11648/j.jfa.20231101.11
AB  - International Auditing and Assurance Standards Board (IAASB), Public Company Accounting Oversight Board (PCAOB) and European Union (EU) have made significant efforts to restore the credibility, information, accuracy, and independence of the audit report by requiring disclosure of the audit partner's name and/or the audit partner's signature on the audit report. This research aims to study and examine the relationship between the audit partner's voluntary disclosure and earnings management. In precise, examine whether the audit partner's disclosure leads to lower level of earnings management. The research has also aimed for examining the impact of the audit partner quality on the aforementioned relationship, using a sample from the companies listed in the Egyptian Stock Exchange for the period starting from 2014 to 2018. The results indicated that: (1) there is a statistically significant negative effect for the audit partner disclosure on the absolute value of earnings management proxied by Miller Ratio; which in turn means that the audit partner disclosure increases the earnings quality. (2) There is no effect for the audit partner quality proxied by his industrial specialization on the relationship between audit partner disclosure and the earnings quality. The findings of this research have important consequences for regulators in determining whether the actual effects of a disclosure requirement are as expected, for investors in reducing costs of obtaining information, and for audit committees in making better decisions when hiring auditors.
VL  - 11
IS  - 1
ER  -

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Author Information

Mohamed Khamis Zaytoun

Accounting Department, Arab East Colleges, Riyadh, Saudi Arabia
Mohamed Mahmoud Elhousy

Accounting Department, Arab East Colleges, Riyadh, Saudi Arabia

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APA Style

Mohamed Khamis Zaytoun, Mohamed Mahmoud Elhousy. (2023). An Investigation of the Effect of Audit Partner’s Disclosure on Earnings Management for Egyptian Companies. Journal of Finance and Accounting, 11(1), 1-11. https://doi.org/10.11648/j.jfa.20231101.11

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ACS Style

Mohamed Khamis Zaytoun; Mohamed Mahmoud Elhousy. An Investigation of the Effect of Audit Partner’s Disclosure on Earnings Management for Egyptian Companies. J. Finance Account. 2023, 11(1), 1-11. doi: 10.11648/j.jfa.20231101.11

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AMA Style

Mohamed Khamis Zaytoun, Mohamed Mahmoud Elhousy. An Investigation of the Effect of Audit Partner’s Disclosure on Earnings Management for Egyptian Companies. J Finance Account. 2023;11(1):1-11. doi: 10.11648/j.jfa.20231101.11

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@article{10.11648/j.jfa.20231101.11,
  author = {Mohamed Khamis Zaytoun and Mohamed Mahmoud Elhousy},
  title = {An Investigation of the Effect of Audit Partner’s Disclosure on Earnings Management for Egyptian Companies},
  journal = {Journal of Finance and Accounting},
  volume = {11},
  number = {1},
  pages = {1-11},
  doi = {10.11648/j.jfa.20231101.11},
  url = {https://doi.org/10.11648/j.jfa.20231101.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.jfa.20231101.11},
  abstract = {International Auditing and Assurance Standards Board (IAASB), Public Company Accounting Oversight Board (PCAOB) and European Union (EU) have made significant efforts to restore the credibility, information, accuracy, and independence of the audit report by requiring disclosure of the audit partner's name and/or the audit partner's signature on the audit report. This research aims to study and examine the relationship between the audit partner's voluntary disclosure and earnings management. In precise, examine whether the audit partner's disclosure leads to lower level of earnings management. The research has also aimed for examining the impact of the audit partner quality on the aforementioned relationship, using a sample from the companies listed in the Egyptian Stock Exchange for the period starting from 2014 to 2018. The results indicated that: (1) there is a statistically significant negative effect for the audit partner disclosure on the absolute value of earnings management proxied by Miller Ratio; which in turn means that the audit partner disclosure increases the earnings quality. (2) There is no effect for the audit partner quality proxied by his industrial specialization on the relationship between audit partner disclosure and the earnings quality. The findings of this research have important consequences for regulators in determining whether the actual effects of a disclosure requirement are as expected, for investors in reducing costs of obtaining information, and for audit committees in making better decisions when hiring auditors.},
 year = {2023}
}

Copy | Download

TY  - JOUR
T1  - An Investigation of the Effect of Audit Partner’s Disclosure on Earnings Management for Egyptian Companies
AU  - Mohamed Khamis Zaytoun
AU  - Mohamed Mahmoud Elhousy
Y1  - 2023/01/10
PY  - 2023
N1  - https://doi.org/10.11648/j.jfa.20231101.11
DO  - 10.11648/j.jfa.20231101.11
T2  - Journal of Finance and Accounting
JF  - Journal of Finance and Accounting
JO  - Journal of Finance and Accounting
SP  - 1
EP  - 11
PB  - Science Publishing Group
SN  - 2330-7323
UR  - https://doi.org/10.11648/j.jfa.20231101.11
AB  - International Auditing and Assurance Standards Board (IAASB), Public Company Accounting Oversight Board (PCAOB) and European Union (EU) have made significant efforts to restore the credibility, information, accuracy, and independence of the audit report by requiring disclosure of the audit partner's name and/or the audit partner's signature on the audit report. This research aims to study and examine the relationship between the audit partner's voluntary disclosure and earnings management. In precise, examine whether the audit partner's disclosure leads to lower level of earnings management. The research has also aimed for examining the impact of the audit partner quality on the aforementioned relationship, using a sample from the companies listed in the Egyptian Stock Exchange for the period starting from 2014 to 2018. The results indicated that: (1) there is a statistically significant negative effect for the audit partner disclosure on the absolute value of earnings management proxied by Miller Ratio; which in turn means that the audit partner disclosure increases the earnings quality. (2) There is no effect for the audit partner quality proxied by his industrial specialization on the relationship between audit partner disclosure and the earnings quality. The findings of this research have important consequences for regulators in determining whether the actual effects of a disclosure requirement are as expected, for investors in reducing costs of obtaining information, and for audit committees in making better decisions when hiring auditors.
VL  - 11
IS  - 1
ER  -

Copy | Download