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引入公司法经济改革计划 文献表明,盈余管理系统相关的公司治理环境和严重操纵利润通常与宽松的治理(Bhat et al .,2006)。CLERP 9的改革改变了公司治理通过强制执行独立审计人员的要求,加强持续信息披露制度和执法权力的变化通过扩展ASIC的民事处罚制度的人违反“参与”的连续披露条款增加从200000美元到100万美元的罚款。的实现提高独立审计师的要求,加强公司的持续信息披露制度将促使管理行为更多的努力以应有的谨慎和对股东的利益当报告财政服务局(Robinson, 2003). 本研究回顾调查增加了审计师独立性之间的关系，提出澳大利亚CLERP 9和收益管理公司。调查这个协会通过检查两组上市实体,使用前/后研究设计覆盖2003 - 2006金融年。第一批100所澳交所公司在上市实体组成,是本研究回顾“兼容”公司,而第二组由ASX小公司的普通股票指数被称为“新兴”公司。 Recent corporate failures have raised concerns about the integrity of accounting information provided to investors and the independence of auditors (Cohen et al., 2007). The major corporate collapses such as Enron, WorldCom and HIH Insurance have sparked significant pressure on management, auditors, directors, the accounting profession and governments' oversight role to review the issue of business ethics and auditor independence (Ahmed et al., 2006). These failures have led to regulatory reforms in Australia with the introduction of the Corporate Law Economic Reform Program (Audit Reform and Corporate Disclosure) Act known as CLERP 9 to promote transparency, accountability and auditor independence (Cooper & Deo, 2005). The literature has shown that earnings management is systematically related to the strength of the corporate governance environment and severe manipulation of earnings are generally associated with loose governance (Bhat et al., 2006). Reforms by CLERP 9 have changed corporate governance enforcement through mandatory independence requirements for auditors, the strengthening of the continuous disclosure regime and a change in enforcement powers of ASIC through the extension of the civil penalty regime to individuals who are 'involved' in the breach of continuous disclosure provision with an increased fine from $200,000 to $1million. The implementation of increased independence requirements for auditors and strengthening of the continuous disclosure regime will prompt management of firms to act more diligently and with due care in respect to shareholders' interests when reporting financial matters (Robinson, 2003). This research review investigates the association between increasing auditor independence proposed by CLERP 9 and earnings management by firms in Australia. It investigates this association by examining two groups of listed entities, using a pre/post research design covering the financial years 2003-2006. The first group of listed entities comprises of firms in the ASX 100, which are referred to in this research review as 'compliant' firms, while the second group consists of firms in the ASX Small Ordinaries Index referred to as 'emerging' firms. The two groups are selected as they are likely to behave in different ways based on their characteristics including size, media coverage, analyst following, size of holdings by institutional investors and degree of scrutiny by regulatory bodies.
The main research question is: "Has auditor independence imposed by CLERP 9 reduced earnings management of Australian firms?" This will be tested examining the difference in accruals behavior of Australian firms during the pre-CLERP 9 and post-CLERP 9 periods. The research question is to be tested using year-by-year cross-sectional and pooled regressions of the model developed based on prior literature and theory. The modified Jones (1991) model measures earnings management as the model has a high degree of acceptance within the earnings management literature. The cross-sectional and pooled regression models are designed jointly to test the association between earnings management and corporate governance enforced by CLERP 9, measured by auditor independence. The regression model also controls for factors that might have an impact in the tests such as firm size, CEO changes, Big-4 auditors and large shareholding.
In a recent commentary, Justice Owen emphasized the importance of the audit function for the capital market as a whole and the reliance placed on the audit function by users of financial statements (Robinson, 2003). Justice Owen made several recommendations aimed at enhancing the audit function, including the appropriate standard of independence, the provision of non-audit services and the relationship between auditors and their clients. The series of corporate scandals in 2000-2002 eroded trust in financial reports and in auditors. One of the objectives of CLERP 9 is to strengthen independence in auditors and to restore integrity of financial reports by curbing earnings management and accounting fraud. Therefore, the extent of earnings management prior to CLERP 9 and the effect of the CLERP 9 "event" on earnings management is an important research topic. Thus, the primary motivation of this research report is to examine the change in earnings management in the period leading to CLERP 9 compared to after CLERP 9. This research is motivated by the desire to understand the effect of corporate governance enforcement by CLERP 9 on earnings management in Australian firms. The secondary motivation is to examine whether reforms by CLERP 9 to address auditor independence have weakened the auditor's economic bond with the client, thus lowering earnings management. There are substantial amounts of research in the audit literature that suggest that audit efficiencies are gained from knowledge spillovers when non-audit services are jointly provided with an audit and thus, it becomes in the best interests of audit companies to provide both audit and non-audit services to their clients (Solomon, 1990). CLERP 9 has been introduced to control the provision of non-audit services and enhance the integrity of financial reports. Accordingly, this research examines the relation between auditor independence and earnings management in the period incorporating the introduction of CLERP 9 in an event study approach.
The most significant contribution of this research is in investigating the effects of CLERP 9 reforms on earnings management in "compliant" and "emerging" firms. The impact of CLERP 9 on emerging firms is important to study as well since in a recent article published in Alan Kohler's Eureka Report, financial education consultant, Scott Francis analyzed the recent performance of the small cap segment of the Australian share market and stated that the recent returns have been strong with the ASX Small Ordinaries Index outperforming the ASX 100 by 18% in 2009. However, the Small Ordinaries Index underperformed the ASX 100 by 16% in 2008 (Francis, 2009). This shows the intense competition between the two indices and also shows the potential growth of the emerging firms in the Small Caps Index. In order to maintain strong growth rates and acquire more capital in the market, these firms are also likely to engage in earnings management. Therefore, this research will provide evidence relating to the efficacy of CLERP 9 reforms in addressing auditor independence and whether increasing auditor independence constrains earnings management in these firms. By examining two different groups of firms, this study will provide an insight into earnings management of these firms in the period prior to CLERP 9 and the period after CLERP 9. This study also contributes to existing literature on auditor independence, by providing evidence in whether auditor independence constrains earnings management practices in compliant and emerging Australian firms. The study also provides an insight into whether emerging firms react differently to compliant firms in terms of earnings management, during the study periods before and after the enactment of CLERP 9. Regulatory reforms from CLERP 9 have different implications for different types of firms and through comparison of emerging firms with complaint firms, it is expected that earnings management has declined significantly for some group of firms, whilst others have continued in managing earnings. As mentioned earlier, both the groups have different external factors affecting them, hence it will be interesting to examine the reaction of both groups after the enactment of CLERP 9.
Earnings management has various definitions commonly classified as white, gray, or black. "Beneficial" (white) earnings management enhances the information value of reports by conveying private information; the "pernicious" (black) involves outright misrepresentation and fraud; the "neutral" gray is manipulation of reports within the boundaries of compliance with bright-line standards, which could be either opportunistic or efficiency enhancing (Yonen & Yaari, 2007). |
