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集團企業營業活動外關係人交易對盈餘持續性之影響：委託同一會計師事務所查核財務報表之效果
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group hires the same audit firm, due to the firm’s better understanding of the content and
characteristics of the related party transactions, auditors have a higher chance of inhibiting
them from utilizing inappropriate related party transactions to manipulate earnings on
financial reports. In this context, the group is more likely to conduct normal related party
transactions that will not lower earnings persistence. However, when a group hires
different audit firms, they may not fully understand the content and characteristics of the
related part transactions, auditors have a lower chance to control the usage of improper
related party transactions to manipulate financial earnings. Therefore, such usage by
groups could lower earnings persistence. Yet, the above results are limited to large
business groups or when the audit firm is big.
The possible reason that the above result is limited to large business groups is the
lower complexity of the related party transactions of small business groups. Even if small
business groups engaged different audit firms, auditors still can inhibit the group’s
manipulation of financial reporting through abnormal related party transactions. Thus,
there is no significant difference between engaging with the same firm and with different
firms for small business groups.
Furthermore, the possible reason that the above result is limited to big audit firms is
when the business group engages with a smaller audit firm, the effect of the related party
transactions that auditors are able to reduce is restricted because of the economic
dependence on the group and the scarcity of resources the firm can invest in the
engagement. Thus, when compared to the components of the group audited by different
audit firms, if the components of the group are audited by a smaller firm, there is no
significant difference in how related party transactions affect earnings persistence.
4. Limitation
A number of affiliated business groups in Taiwan have components that include
banking, securities, and insurance industries. However, due to the special properties of
these industries, their methods of variable measurement are different from those used in
this study for regular industries. Thus, they are excluded from this study. This is a
limitation for this study. Furthermore, while selecting companies as samples, this study
excluded companies with incomplete variables, leaving only those with complete
information for analysis. This is another limitation of this study.