Earnings management and the role of auditors in an unusual IFRS context: the case of Greece

NOTICE: this is the author’s version of a work that was accepted for publication in Journal of International Accounting, Auditing and Taxation. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of International Accounting, Auditing and Taxation, Volume 21, Issue 1, 2012, Pages 62–78 doi:10.1016/j.intaccaudtax.2012.01.005The mandatory adoption of International Financial Reporting Standards (IFRS) on January 1, 2005 aimed to improve the quality of financial reporting in Greece, which had been regularly criticized for the practice of earnings management and the ineffectiveness of external auditing. However, the unusual characteristics of the economic environment and institutional setting of code-law oriented Greece, has made the attempt even more challenging. To investigate the role of auditors in potentially approving managers’ opportunistic behaviour in the post-IFRS period, we examine the relationship between earnings management, measured by signed discretionary accruals, and auditor reporting, measured by audit firm size (Big 4 vs. non-Big 4) and audit opinion type (unqualified vs. qualified). Using a sample of firms listed on the Athens Stock Exchange over a five-year period, we find that the size of the audit firm does not affect the level of earnings management, and the audit opinion qualification is not issued in response to management's opportunistic behaviour. The interpretation of the results is conditional on the Greek context, where the economic bonding of auditors with their clients is strong, investor protection is low, enforcement mechanisms are weak and there is low litigation and reputation loss, even in the post-IFRS period

Audit opinion and earnings management: evidence from Greece

NOTICE: this is the author’s version of a work that was accepted for publication in Accounting Forum. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Accounting Forum, Volume 38, Issue 1, March 2014, Pages 38–54 doi:10.1016/j.accfor.2013.09.002This study examines the relationship between audit opinions and earnings management, as measured by discretionary accruals, for listed firms on the Athens Stock Exchange (ASE). We divide the qualified audit opinions into two categories: qualified for the going-concern uncertainty and qualified for other reasons. The results indicate that audit opinions are not related to earnings management. Client financial characteristics, such as profitability and size are determinants of the going-concern audit opinion decision. The decision of auditors to issue qualified opinions for other reasons is explained by the type of audit opinion issued in the previous year

Identification of financial statement fraud in Greece by using computational intelligence techniques

The consequences of financial fraud are an issue with far-reaching for investors, lenders, regulators, corporate sectors and consumers. The range of development of new technologies such as cloud and mobile computing in recent years has compounded the problem. Manual detection which is a traditional method is not only inaccurate, expensive and time-consuming but also they are impractical for the management of big data. Auditors, financial institutions and regulators have tried to automated processes using statistical and computational methods. This paper presents comprehensive research in financial statement fraud detection by using machine learning techniques with a particular focus on computational intelligence (CI) techniques. We have collected a sample of 2469 observations since 2002 to 2015. Research gap was identified as none of the existing researchers address the association between financial statement fraud and CI-based detection algorithms and their performance, as reported in the literature. Also, the innovation of this research is that the selection of data sample is aimed to create models which will be capable of detecting the falsification in financial statements

Audit opinion, audit firm and financial information in an IFRS context

The complete work is available via: http://pubadmin.panteion.gr/download/timitikos_kafousis.pdf Copyright © 2012 Published by Panteion University of Social and Political SciencesChapter from: Contributions to accounting research I : studies in honour of emeritus professor George Kafoussis, 201

Euro and profitability of Greek banks

The Greek Banking System, in its effort to prepare itself for the changeover to the EURO, will face some initial costs. Being the basic institution of money distribution, this changeover will impose a heavy burden on banks. In addition to the costs that banks will sustain, they will derive new benefits. The impact of the EURO on Greek Banks is explained through a cost-benefit analysis, by providing a perspective of the anticipated costs, benefits and outcome. The primary objective of this paper is to examine the costs that will arise from this changeover and the benefits that will be produced, as explained by the change in the bank profits. The study results consider the existence of two projects: one without the introduction to EURO and one with the introduction to EURO. We proceed through an incremental method to determine when profits will be produced. To further demonstrate this, we have calculated the NPV of the introduction to the EURO by considering the year 2002 as the basic year. The analysis shows that during the period 2002 - 2007 banks will face a loss in their bank profits. Further analysis indicates that profits will rapidly show increases in the long-term period. Therefore, the changeover to the EURO will probably be very lucrative for the banking system of Greece and the economy in general over the long-term.peer-reviewe

SEGMENT REPORTING: THEORETICAL ANALYSIS AND EMPIRICAL APPROACH IN GREEK ENTERPRISES

THIS THESIS EXAMINES THE METHOD USED TO PREPARE AND ISSUE SEGMENT REPORTING BY THE LARGER GREEK ENTERPRISES. THE OBJECTIVE AIMS ARE TWO: THE FIRST REFERS TOTHE PROPOSED METHOD OF PREPARATION AND ISSUE OF SEGMENT REPORTING, SCIENTIFICALLY ACCEPTABLE, THE SECOND REFERS TO THE PREPARATION OF SEGMENT REPORTINGFOR INTERNAL USE, BASED ON THEIR PARTICULAR CHARACTERISTICS. THE FIRMS' ATTITUDE TO SEGMENT REPORTING IS EXAMINED. THE METHOD OF ISSUE SEGMENT REPORTS COMPRISES THREE STAGES: A) DETERMINATION OF SEGMENTS THROUGH THE IDENTIFICATION AND GROUPING OF THE COMPANY'S PRODUCTS / SERVICES; B) CALCULATION OF THE CORRESPONDING DATA BY SEGMENT; C) SELECTION OF ISSUE OF THE IMPORTANT SEGMENTS. THE SAMPLE USED IN THIS SURVEY COMPRISED THE 73 LARGEST INDUSTRIAL ENTERPRISES IN GREECE. ACCORDING TO THE RESULTS, THE ISSUE OF SEGMENT REPORTING FOR INTERNAL INFORMATION IS NOT INDEPENDENT OF CHARACTERISTICS OF RESPONSIBILITY ACCOUNTING AND ORGANIZATIONAL ACCOUNTING CHARACTERISTICS. DISCRIMINANT ANALYSIS THENIDENTIFIED WHICH OF THOSE FACTORS DETERMINING COMPANY ATTITUDES TO SEGMENT REPORTING CONTRIBUTE SIGNIFICANTLY TO THE DISTINCTION OF COMPANIES INTO THOSE THAT PREPARE SEGMENT REPORTING FOR MANAGEMENT USE AND THOSE THAT DO NOT. THESE FACTORS WERE, IN ORDER OF INTENSITY OF DISTINCTION: A) THE EFFECTIVE EVALUATION OF THE FINANCIAL STATUS AND FORECASTING; B) THE BENEFITS TO THE USERS (ABSTRACT TRUNCATED)Η ΔΙΑΤΡΙΒΗ ΕΞΕΤΑΖΕΤΑΙ Η ΜΕΘΟΔΟΛΟΓΙΑ ΣΥΝΤΑΞΗΣ ΚΑΙ Η ΕΚΔΟΣΗ ΓΙΑ ΕΣΩΤΕΡΙΚΗ ΧΡΗΣΗ ΤΩΝ ΤΜΗΜΑΤΙΚΩΝ ΚΑΤΑΣΤΑΣΕΩΝ ΑΠΟ ΤΙΣ ΜΕΓΑΛΕΣ ΕΠΙΧΕΙΡΗΣΕΙΣ ΣΤΗΝ ΕΛΛΑΔΑ. ΟΙ ΣΤΟΧΟΙ ΤΗΣ ΕΡΓΑΣΙΑΣ ΕΙΝΑΙ, Η ΠΡΟΤΑΣΗ ΜΕΘΟΔΟΛΟΓΙΑΣ ΣΥΝΤΑΞΗΣ ΚΑΙ ΕΚΔΟΣΗΣ ΤΜΗΜΑΤΙΚΩΝ ΚΑΤΑΣΤΑΣΕΩΝ, ΕΠΙΣΤΗΜΟΝΙΚΑ ΑΠΟΔΕΚΤΗΣ ΚΑΙ Η ΔΙΕΡΕΥΝΗΣΗ ΤΗΣ ΣΥΝΤΑΞΗΣ ΤΜΗΜΑΤΙΚΩΝ ΚΑΤΑΣΤΑΣΕΩΝ ΓΙΑ ΕΣΩΤΕΡΙΚΗ ΧΡΗΣΗ ΣΤΗΝ ΕΛΛΑΔΑ, ΜΕ ΒΑΣΗ ΟΡΙΣΜΕΝΑ ΧΑΡΑΚΤΗΡΙΣΤΙΚΑ ΤΩΝ ΕΠΙΧΕΙΡΗΣΕΩΝ, ΚΑΘΩΣ ΚΑΙ Η ΣΤΑΣΗ ΤΟΥΣ ΑΠΕΝΤΑΝΤΙ ΣΕ ΑΥΤΕΣ. ΠΡΟΤΕΙΝΕΤΑΙ ΜΕΘΟΔΟΛΟΓΙΑ ΣΥΝΤΑΞΗΣ ΤΜΗΜΑΤΙΚΩΝ ΚΑΤΑΣΤΑΣΕΩΝ Η ΟΠΟΙΑ ΠΕΡΙΛΑΜΒΑΝΕΙ ΤΡΙΑ ΣΤΑΔΙΑ: Α) ΠΡΟΣΔΙΟΡΙΣΜΟΣ ΤΜΗΜΑΤΩΝ ΜΕ ΑΝΑΓΝΩΡΙΣΗ ΚΑΙ ΟΜΑΔΟΠΟΙΗΣΗ ΤΩΝ ΠΡΟΙΟΝΤΩΝ ΚΑΙ ΤΩΝ ΥΠΗΡΕΣΙΩΝ, Β) ΥΠΟΛΟΓΙΣΜΟΣ ΤΩΝ ΑΝΤΙΣΤΟΙΧΩΝ ΣΤΟΙΧΕΙΩΝ ΑΝΑ ΤΜΗΜΑ ΚΑΙ Γ) ΕΠΙΛΟΓΗ ΔΗΜΟΣΙΕΥΣΗΣ ΤΩΝ ΣΗΜΑΝΤΙΚΩΝ ΤΜΗΜΑΤΩΝ. ΠΡΟΤΕΙΝΟΝΤΑΙ ΤΡΕΙΣ ΜΟΡΦΕΣ ΤΜΗΜΑΤΙΚΩΝ ΚΑΤΑΣΤΑΣΕΩΝ. ΟΙ ΕΠΙΧΕΙΡΗΣΕΙΣ ΠΟΥ ΣΥΜΜΕΤΕΙΧΑΝ ΣΤΗΝ ΕΡΕΥΝΑ ΑΝΗΛΘΑΝ ΣΕ 73. ΣΥΜΦΩΝΑ ΜΕ ΤΑΑΠΟΤΕΛΕΣΜΑΤΑ, Η ΣΥΝΤΑΞΗ ΤΜΗΜΑΤΙΚΩΝ ΚΑΤΑΣΤΑΣΕΩΝ ΑΠΟ ΤΙΣ ΕΠΙΧΕΙΡΗΣΕΙΣ ΔΕΝ ΕΙΝΑΙ ΑΝΕΞΑΡΤΗΤΗ ΑΠΟ ΤΗΝ ΥΠΑΡΞΗ ΧΑΡΑΚΤΗΡΙΣΤΙΚΩΝ ΛΟΓΙΣΤΙΚΗΣ ΤΗΣ ΕΥΘΥΝΗΣ ΚΑΙ ΑΠΟ ΤΗΝ ΥΠΑΡΞΗ ΧΑΡΑΚΤΗΡΙΣΤΙΚΩΝ ΛΟΓΙΣΤΙΚΗΣ ΟΡΓΑΝΩΣΗΣ. ΓΙΑ ΤΟΝ ΠΡΟΣΔΙΟΡΙΣΜΟ ΤΗΣ ΣΤΑΣΗΣ ΤΩΝ ΕΠΙΧΕΙΡΗΣΕΩΝ ΑΠΕΝΑΝΤΙ ΣΤΙΣ Τ.Κ. ΧΡΗΣΙΜΟΠΟΙΗΘΗΚΕ Η ΜΕΘΟΔΟΣ ΤΗΣ ΑΝΑΛΥΣΗΣ ΠΑΡΑΓΟΝΤΩΝ (FACTOR ANALYSIS). ΣΤΗ ΣΥΝΕΧΕΙΑ ΜΕ ΤΗ ΜΕΘΟΔΟ ΤΗΣ ΔΙΑΚΡΙΡΙΚΗΣ ΑΝΑΛΥΣΗΣ (DISCRIMINANT ANALYSIS), ΕΝΤΟΠΙΣΤΗΚΑΝ ΠΟΙΟΙ ΑΠΟ ΤΟΥΣ ΠΑΡΑΓΟΝΤΕΣ ΣΥΜΒΑΛΛΟΥΝ ΣΗΜΑΝΤΙΚΑ ΣΤΟ ΔΙΑΧΩΡΙΣΜΟ ΤΩΝ ΕΠΙΧΕΙΡΗΣΕΩΝ ΑΝΑΜΕΣΑ ΣΕ ΑΥΤΕΣ ΠΟΥ ΣΥΝΤΑΣΣΟΥΝ ΚΑΙΣΕ ΑΥΤΕΣ (ΠΕΡΙΚΟΠΗ ΠΕΡΙΛΗΨΗΣ