The Role of Reporting Incentives and Quantification in Auditor's Evaluations of Earnings Fluctuations
- Topics:
- Financial Research
- Tags:
- Explanation,
- Incentive,
- Sales,
- Sales Force Management
- Source:
- University of Texas at Austin
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Overview: This paper examines two factors that is expected to affect how auditors evaluate client-provided explanations for an important account that requires significant estimation (i.e., revenue): whether the explanation is quantified (i.e., put into numbers) and the strength of the client manager's incentives to manage earnings. It expects that auditor's evaluations of client-provided explanations for unexpected financial-statement fluctuations would be jointly influenced by these factors. Instead, it finds that the persuasiveness of client explanations is primarily determined by the client's incentives to manage earnings.
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Format: PDF | Size: 500KB | Date: Nov 2001 | Pages: 29
