Audit Fees under Dual Earnings Management: The Moderating Role of Accruals in the REM-Audit Fee Nexus

Iranian Journal of Accounting, Auditing and Finance

مقالات آماده انتشار، پذیرفته شده، انتشار آنلاین از تاریخ 12 آذر 1404

نوع مقاله: Original Article

شناسه دیجیتال (DOI): 10.22067/ijaaf.2025.95896.1595

نویسندگان

SeyedHamid Jalali¹؛ Hassan Hemmati²؛ Omid Faraji^{* 3}؛ Hossein Jabbari²

¹PhD Student, Department of Accounting, Kashan Branch, Islamic Azad University, Kashan, Iran.

²Assistant Professor, Department of Accounting, Kashan Branch, Islamic Azad University, Kashan, Iran.

³Postal address: Accounting and Financial Management Department, College of Farabi, University of Tehran, Qom, Iran.

چکیده

As financial reporting becomes increasingly complex, both real earnings management (REM) and accrual-based earnings management (AEM) pose challenges for auditors in risk assessment and fee determination. While prior studies examined these strategies in isolation, scant attention has been paid to their concurrent use, dual earnings management, particularly in audit pricing. Existing literature lacks analyses of the REM–AEM interaction within moderating frameworks, leaving unclear how AEM intensity moderates the REM–audit fee relationship. This gap impedes understanding of audit pricing in information-asymmetric settings and may lead to suboptimal audit judgments. To address this gap, this study investigates how AEM moderates the relationship between REM and audit fees. The study offers three novelties. First, it is the first in the domestic literature to examine the REM–AEM interaction. Second, it treats AEM as a moderator, revealing how auditors respond to compounded informational risk. Third, it provides evidence from the Iranian capital market, offering a practical framework for audit risk assessment in low-transparency environments. Using data from 72 firms listed on the Tehran Stock Exchange (2013–2025), results indicate a positive and significant relationship between REM and audit fees. A negative and significant interaction between REM and AEM emerges only when AEM is measured by the Kothari model. Findings suggest that concurrent use of both strategies alters auditors’ risk perceptions and attenuates REM’s direct effect on audit fees. Overall, the study advances audit pricing theory by integrating behavioral and signaling perspectives and offers practical implications for auditors, regulators, and standard-setters.

کلیدواژه‌ها

Accrual Earnings Management؛ Real Earnings Management؛ Audit Fees؛ Moderating Role؛ Dual Earnings Management