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The Influence of Earnings Quality for Restatements and Auditor’s Qualified Opinion

Author

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  • Adriano Antonio Siqueira

    (Fucape Business School, Brazil)

  • Fernando Caio Galdi

    (Fucape Business School, Brazil)

Abstract

The objective of the present study was to raise the cases of restatements and to evaluate whether these events were associated with the low earnings quality and with the provision of advice with a qualified opinion by audit firms. The results obtained with the analysis indicate that the low earnings quality increases the chances of republishing the financial statements. Additionally, the results indicate that there is no evidence that lower earnings quality increases the chances of issuing a qualified audit report or disapproval of the financial statements by the independent auditors. These results point to a divergence regarding the understanding of earnings quality by the auditors and by the regulatory agency.

Suggested Citation

  • Adriano Antonio Siqueira & Fernando Caio Galdi, 2020. "The Influence of Earnings Quality for Restatements and Auditor’s Qualified Opinion," New Challenges in Accounting and Finance, EUROKD, vol. 3, pages 53-68.
    • Handle: RePEc:bco:ncafaa::v:3:y:2020:p:53-68
    DOI: 10.32038/NCAF.2020.03.05
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    References listed on IDEAS

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    1. Peter Baxter & Julie Cotter, 2009. "Audit committees and earnings quality," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 49(2), pages 267-290, June.
    2. Dechow, Patricia & Ge, Weili & Schrand, Catherine, 2010. "Understanding earnings quality: A review of the proxies, their determinants and their consequences," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 344-401, December.
    3. Ronald A. Davidson & Dean Neu, 1993. "A Note on the Association between Audit Firm Size and Audit Quality," Contemporary Accounting Research, John Wiley & Sons, vol. 9(2), pages 479-488, March.
    4. Gul, Ferdinand A. & Fung, Simon Yu Kit & Jaggi, Bikki, 2009. "Earnings quality: Some evidence on the role of auditor tenure and auditors' industry expertise," Journal of Accounting and Economics, Elsevier, vol. 47(3), pages 265-287, June.
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