Auditors Roles Towards the Practice of Earnings Manipulation among the Malaysian Public Firms

The main objective of this study is to investigate the relationship of Big 4 auditor and auditor switch towards earnings manipulation. This study employed a sample of 1002 firm-year data from Bursa Malaysia over the period from 2010 to 2012. Using Modified Jones Model with ROA (Kathori et al., 2005), the result shows that Big 4 auditor significantly reduces the occurrence of earnings manipulation. The result also found that switching from non-Big 4 to Big 4 audit firm shows the significant positive impact towards earnings manipulation. This indicates that auditor switch from non-Big 4 to Big 4 auditor does not reduce earnings manipulation activities. This study however, provide contradictory result using the Modified Jones Model as proposed by Dechow et al. (1995) which shows no significant impact between Big 4 auditor and auditor switch toward earnings manipulation.