Earnings Management and Audit Opinion: Evidences of Private Audit Firms

This study investigates relation between earnings management and audit opinion in private sector of auditing. The sample period is 10 years from 2003-2012. The number ofsample is 106 listed firms of Tehran Stock Exchange (TSE). Using correlation method and multiple regression, the results of this study show that there is a relation between earnings management, size, profitability, debt ratio, audit fees, governmental ownership and qualified audit opinion paragraphs in the auditor's report. Moreover, research findings indicate that there is no relation between firm complication, auditor change, management change with qualified audit opinion paragraphs. Research evidence claim that positive relation between earnings management and qualified audit opinion paragraphs can be the sign of increase in audit quality in private sector of auditing.