The Relationship between Key Audit Matters and Earnings Management Strategies
Subject Areas : Educationalebrahim navidi 1 , fatemeh manafi 2 * , Saleh Behrouz Gajin 3
1 - Assistant Professor, Department of Accounting, Marand Branch, Islamic Azad University, Marand, Iran
2 - Department of Accounting, Mara.C., Islamic Azad University, Marand
3 - PhD student in Accounting, Marand Branch, Islamic Azad University, Marand, Iran
Keywords: Accrual-Based Earnings Management, Real Earnings Management, Key Audit Matters, Audit Reports.,
Abstract :
This study aims to examine corporate earnings management responses to the disclosure of Key Audit Matters (KAMs) in audit reports. While the existing literature has extensively explored the relationship between earnings management and various risks, limited research has investigated the link between KAM disclosures and earnings management strategies (real earnings management and accrual-based earnings management). To test the hypotheses, a sample of 110 firms listed on the Tehran Stock Exchange was analyzed over the period 2017 to 2023. The findings reveal a differential relationship between disclosed KAMs in audit reports and earnings management strategies. Specifically, the results indicate that earnings management strategies vary based on the number, type, and content of disclosed KAMs. This study contributes to a deeper understanding of how financial information transparency and accounting quality influence corporate behavior, particularly in how firms adjust their earnings management practices in response to audit oversight.
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