Auditor Size

This Study seeks to scrutinize whether surplus free cash flow is correlated with earnings management, if auditor size moderates this relationship. To do so, modified Jones discretionary accrual model (1995) and audit firm size are used as audit quality indicator to measure earnings management. The research hypotheses are built upon a sample of 103 companies listed on the Tehran Stock Exchange during the years 2013 to 2017 and then tested using multiple regression model based on panel data techniques. The results reveal that earnings management is significantly associated with surplus free cash flow. Furthermore, the findings confirm that auditor size exerts no significant impact on the relationship between surplus free cash flow and corporate earnings management.

One of the most fundamental presumptions of management audit shows that change in costs is in fir correlation with increase and decrease in activity level. However, this assumption is discussed with considering the cost stickiness by Anderson et al. it means that the amount of increase in costs with the increase in activity level is more than reduction in costs per same amount of reduction in activity level. On the other hand, audit could increase the reliability of information available for the users and with the increase in audit quality; quality of information is also enhanced. The main purpose of this study is to investigate the effect of audit quality on cost stickiness in manufacturing companies listed in Tehran Stock Exchange. Statistical population of this study consists of companies listed in Tehran Stock Exchange from 2007 to 2014. To measure the correlation of research variables, Pearson correlation test is used and finally, to test research hypotheses, generalized ordinary least-squares regression is used. The results obtained from testing hypotheses how that size of audit and audit tenure (more than 3 years) could affect cost stickiness positively and significantly. However, the expertise of auditor in the industry and importance of a company for a audit institution could have no effect on cost stickiness.