Investigating the Moderating Effect of Auditor industry specialization on the Relationship between Board Governance and Accruals Based Earnings Management: Empirical Evidence from Companies Listed in Tehran

Document Type : Original Article

Authors
Ahmad Ahmadpour 1
Esmail Tavakolnia 2
Toktam Masoomi 3
1 Professor of Accounting, Mazandaran University, Babolsar, Iran
2 Ph.D. Student of Accounting, Mazandaran University, Babolsar, Iran
3 M.A. Student of Accounting, Department of Accounting, Mashhad Branch, Islamic Azad University, Mashhad, Iran.
Abstract
The purpose of this study is to investigate the interaction effect of auditor industry specialization and board governance on earnings management. The sample of this study, includes 145 companies listed in the Tehran Stock Exchange during the period 1387-1391 and for processing and testing hypotheses, Fixed Effects Model and Estimated Generalized Least Squares (EGLS) methodology are used. The results show that auditor industry specialization and board independence have negative and significant impact on the earnings management. Also study results show that negative association between earnings management and board independence is weaker for firms audited by industry specialist auditors and firms audited by non-specialist auditors.
Keywords
auditor industry specialization
Board independence
earnings management
Tehran Stock Exchange