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Sample distribution

Sample distribution

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This paper examines the role of audit quality and board characteristics as potential restraints of earnings management incidence. Using a UK sample of 174 companies from FTSE-350 as of January 2011, we report that audit quality plays a key role in restraining the magnitude of discretionary accruals, measured by a cross-sectional performance-matched...

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... sample includes the companies listed on FTSE-350 after excluding the financial firms as of January 2011, 3 and the required data is obtained from DataStream for the preceding fiscal year. Table 1 reveals the sample distribution of companies' industry over the sample. Following Kothari et al. (2005), we measure earnings management by calculating the discretionary accruals using a cross-sectional performance-matched modified-Jones model, which is a developed version of the modified Jones (1991) model (Dechow et al., 1995). ...

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