Audit Quality and Earnings Management: Empirical Evidence from Chinese Security Market

摘要

China securities regulatory committee (CSRC) perceived 15 auditors to be higher auditor quality suppliers to execute supplementary audit. But these 15 auditors do not show higher ability in deterring opportunistic earnings management through discretionary accruals and non-operating items based on data from China security market from the year 2002 to 2004. This study uses a two-stage "treatment effects" model to address the self-selection bias, and find that it is necessary to do so.