Do the Auditor Conformity within a Holding Company and the Provision of Non-Audit Services Affect the Earnings Management of a Holding Company?

Abstract

This study empirically examines the effect of the auditor conformity and provision of non-audit services by the identical auditor on earnings management of a holding company. Our empirical results are as follows. First, upward discretionary accrual increases are shown as the increase in the degree of auditor conformity. In detail, in case of the identification of audit engagement, the holding company becomes more important customer to them. Second, although, we expected to see that identical auditors,simultaneously providing non-audit services, are related to the change in the earnings management within the holding company, no significant results were given. Possible reasons for these results are limited samples of this study and the use of aggregate measure of non-audit services. In the future, we will try to collect more detailed samples including non-listed companies and investigate the second hypothesis using detailed measures such as tax-related non-audit services and IFRS-related non-audit services.