Accounting and Auditing Research

Accounting and Auditing Research

The Effect of External Financing and Role of Monitoring Auditor on Voluntary Discretionary Accruals with Emphasis on Type of Audit Opinion

Document Type : Original Article

Authors
Omid Sabaghiyan Toosi
Zahra Moradi
Shohreh Yazdani
Department of Accounting, Damavand Branch, Azad University, Damavand, Iran.
10.22034/iaar.2023.185379
Abstract
Objective: The purpose of this study is to investigate the effect of external financing and role of monitoring auditor on voluntary discretionary accruals with emphasis on type of audit opinion.
Methods: In this research, the data of 320 companies during the years 2010-2020 have been analyzed using eviews econometric software. The hypotheses were tested using the balanced panel estimation (3520 Balanced/ Panel) and the (OLS) and ML - OP methods in the whole statistical population.
Results: Shows companies are less likely to be willing to make voluntary discretionary accruals for the purpose of income smoothing during the period when they are financed through current loan. High-income auditing institutes reduce the use of discretionary accruals in companies. However, most of the Iranian audit market is owned by the auditing organization and A group auditing institutes, which are members of the society of certified public accountants. Also, the variables expressing the role of monitoring auditor (tenure, auditor independence and auditor rotation) have a significant relationship with the type of audit opinion.
Conclusion: Investment opportunities play an important role in the company's financial environment and the issue of external financing for companies with high investment opportunities is more important than companies with low investment opportunities, so high audit quality and implicit control, the role of deterrence in manipulation of profits will lead to companies with different investment opportunities.
Keywords
Voluntary Discretionary Accruals
External Financing
Role of Monitoring Auditor
Financial Constrains
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Accounting and Auditing Research
Volume 15, Issue 59
Autumn 2023
Pages 201-222