IDEAS home Printed from https://ideas.repec.org/a/mth/ajfa88/v7y2015i2p255280.html

The Impact of Audit Quality Features on Enhancing Earnings Quality: The Evidence of Listed Manufacturing Firms at Amman Stock Exchange

Author

Listed:
  • Mohammad Abdallah Almomani

Abstract

The study aims at investigating the impact of external audit quality features on enhancing the quality of accounting profits of the listed manufacturing firms at Amman Stock Exchange (ASE), where continuity of profit has been used as Proxy variable to express the quality of earnings. Indicators of quality of audit, audit office size, auditors' fees, period of customer's retention, type of auditor's opinion, and the specialization in client's industry, were used to measure audit quality. A sample of 45 firms had been selected, and data covering the period 2009-2013 had been collected from these firms, where 225 observations were used in the analysis. The study finds that the earnings of listed manufacturing firms at Amman Stock Exchange are with good quality, and that there is a linear relationship between external audit quality and the quality of reported earnings. Auditors' fees have most important significant effect on earnings quality, followed by auditors' opinion, where others factors has no significant effect on earnings quality. Based on these findings, the study raises several questions about the reliability of audit quality properties by stakeholders in firms, especially investors, when they check the quality of earnings, whenever they need to take a decision. The study recommends further researches regarding the issue by using other metrics to measure earnings quality, and through the addition of other properties to the quality of the audit, such as linked audit offices with auditing global offices, degree of qualification employees, and the opened lawsuits against audit office.

Suggested Citation

  • Mohammad Abdallah Almomani, 2015. "The Impact of Audit Quality Features on Enhancing Earnings Quality: The Evidence of Listed Manufacturing Firms at Amman Stock Exchange," Asian Journal of Finance & Accounting, Macrothink Institute, vol. 7(2), pages 255280-2552, December.
    • Handle: RePEc:mth:ajfa88:v:7:y:2015:i:2:p:255280
    as

    Download full text from publisher

    File URL: https://www.macrothink.org/journal/index.php/ajfa/article/download/8539/7126
    Download Restriction: no
    File URL: https://www.macrothink.org/journal/index.php/ajfa/article/view/8539
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. 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.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ngoc Kim Pham & Hung Nguyen Duong & Tin Quang Pham & Nga Thi Thuy Ho, 2017. "Audit Firm Size, Audit Fee, Audit Reputation and Audit Quality: The Case of Listed Companies in Vietnam," Asian Journal of Finance & Accounting, Macrothink Institute, vol. 9(1), pages 429447-4294, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sang Cheol Lee & Mooweon Rhee & Jongchul Yoon, 2018. "Foreign Monitoring and Audit Quality: Evidence from Korea," Sustainability, MDPI, vol. 10(9), pages 1-22, September.
    2. Bruce J. Mcconomy, 1998. "Bias and Accuracy of Management Earnings Forecasts: An Evaluation of the Impact of Auditing," Contemporary Accounting Research, John Wiley & Sons, vol. 15(2), pages 167-195, June.
    3. Yanli Li & Shengxi Xue & Xiajun Yi & Bin Zou & Stavros Sindakis, 2025. "The Clan Effect: Exploring the Nexus Between Organizational Culture, Trust, and Audit Economics," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 16(1), pages 3175-3213, March.
    4. Constant Djama, 2008. "Fraude A L'Information Comptable Et Financiere : Le Role Des Autorites De Regulation," Post-Print halshs-00522510, HAL.
    5. 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.
    6. Ely Suhayati, 2012. "The Influence Of Audit Fee, Audit Time Budget Pressure And Public Accountant Attitude On The Public Accountant Dysfunctional Behavior And It’S Implication On Audit Quality Survey On “Small” Scale Public Accounting Firm’S In Java," Journal of Global Management, Global Research Agency, vol. 4(1), pages 1-24, July.
    7. Mahdi Salehi & Ali Mansoury, 2009. "Firm Size, Audit Regulation and Fraud Detection: Empirical Evidence from Iran," Management, University of Primorska, Faculty of Management Koper, vol. 4(1), pages 5-19.
    8. Sherry Fang Li & Sherry Fang Li, 2020. "Cost Of Debt And Auditor Choice," Accounting & Taxation, The Institute for Business and Finance Research, vol. 12(1), pages 35-44.
    9. Jean Bédard & Daniel Coulombe & Lucie Courteau, 2008. "Audit Committee, Underpricing of IPOs, and Accuracy of Management Earnings Forecasts," Corporate Governance: An International Review, Wiley Blackwell, vol. 16(6), pages 519-535, November.
    10. Siew, Eu-Gene & Rosli, Khairina & Yeow, Paul H.P., 2020. "Organizational and environmental influences in the adoption of computer-assisted audit tools and techniques (CAATTs) by audit firms in Malaysia," International Journal of Accounting Information Systems, Elsevier, vol. 36(C).
    11. Thi Giang Tan Tran & Quoc Thuan Pham & Thi Thu Phuong Tran & Thi Thao Hien Bui, 2025. "The Impact of Audit Firm Size on Audit Quality - An Empirical Study of The Vietnamese Stock Market," SAGE Open, , vol. 15(2), pages 21582440251, April.
    12. Mohannad Obeid Al Shbail, 2018. "A Theoretical Discussion of Factors Affecting the Internal Audit Quality in Jordanian Public Shareholding Companies," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 8(2), pages 218-227, April.
    13. Giuseppe Iuliano & Gaetano Matonti, 2015. "Do big 4 audit companies detect earnings management and report it in the audit opinion? Empirical evidence from italian non-listed firms," ESPERIENZE D'IMPRESA, FrancoAngeli Editore, vol. 2015(2), pages 5-43.
    14. Connie L. Becker & Mark L. Defond & James Jiambalvo & K.R. Subramanyam, 1998. "The Effect of Audit Quality on Earnings Management," Contemporary Accounting Research, John Wiley & Sons, vol. 15(1), pages 1-24, March.
    15. Baig, Ahmed & DeLisle, R. Jared & Zaynutdinova, Gulnara R., 2022. "Index mutual fund ownership and financial reporting quality," Research in International Business and Finance, Elsevier, vol. 62(C).
    16. Clatworthy, Mark A & Pong, Christopher K.M. & Wong, Woon K., 2009. "Auditor Quality and the Role of Accounting Information in Explaining UK Stock Returns," Cardiff Economics Working Papers E2009/9, Cardiff University, Cardiff Business School, Economics Section, revised Oct 2011.
    17. Denis Cormier & Michel Magnan & Bernard Morard, 2000. "The contractual and value relevance of reported earnings in a dividend-focused environment," European Accounting Review, Taylor & Francis Journals, vol. 9(3), pages 387-417.
    18. Lu, Zhi & Bolton, Lisa E. & Ng, Sharon & Chen, Haipeng (Allan), 2020. "The Price of Power: How Firm’s Market Power Affects Perceived Fairness of Price Increases," Journal of Retailing, Elsevier, vol. 96(2), pages 220-234.
    19. Peta Stevenson-Clarke & Allan Hodgson, 2005. "Estimating the Value Added by Big 8/6/5 Auditors Using Earnings and Cash Response Coefficients," Accounting Research Journal, Emerald Group Publishing, vol. 18(1), pages 21-33, June.
    20. Tom Van Caneghem, 2004. "The impact of audit quality on earnings rounding-up behaviour: some UK evidence," European Accounting Review, Taylor & Francis Journals, vol. 13(4), pages 771-786.

    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mth:ajfa88:v:7:y:2015:i:2:p:255280. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Technical Support Office (email available below). General contact details of provider: http://www.macrothink.org/journal/index.php/ajfa .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.