Effects of experience years, gender of auditors and audit firm size on firm’ discretionary accrual management: Evidence from Vietnam

cretionary accruals. Hence, the hypothesis 
are accepted (Table 2). 
Table 2 
The estimated results based on RE and FE 
Independent 
variable 
Dependent variable (DA) 
FE RE 
AGE -0,0087*** -0,0084*** 
SIZE -0,0720* -0,0666*** 
GENDER -0,0368* -0,0445*** 
Constant 0,2429 0,2446 
P-value 0,000 0,000 
Durbin-Watson 2,068 1,669 
Notes: *** Significant at 1% level, Significant at 5% 
level * Significant at 10% level 
4.3. Discussion of results 
 Number of experience years of auditors 
The regression results in Table 2 show 
that variable AGE affects negatively variable 
DA. These results show that the number of 
experience years of auditors affects the 
restriction of discretionary accruals; 
particularly, when the number of experience 
years of auditors increases, the magnitude of 
discretionary accruals decreases, meaning the 
quality of information in financial statements 
is more reliable. The results are also 
consistent with the research of Dechow and 
Sloan (1991), Barker and Mueller (2002). 
Because the more years of experience auditors 
have, the easier they can discover errors in 
financial statements and the less DA they 
accept than auditors with less experienced. 
Moreover, the more practicing years auditors 
have, the more importance of professional 
ethics auditors are aware of, so they will be 
more cautious in carrying out audit of 
financial statements to guarantee the 
occupational prestige 
 Audit firm size 
According to the results in Table 2, 
variable SIZE affects negatively variable DA. 
This shows that the value of discretionary 
accruals of companies audited by Big 4 is 
lower than the value of discretionary accruals 
of companies audited by other audit firms 
which are not Big 4. Thus, Big 4 audit firms 
restrict discretionary accruals in enterprises 
they audit, which means Big 4 audit firms will 
restrict the application of accruals. These 
results are similar to the results of previous 
studies such as ones of Becker et al (1998), 
Francis and colleagues (1999), Elder and 
Zhou (2002), Rusmin (2010). In fact, the audit 
firms of Bigv4 are able to gather a lot of 
qualified and much experienced auditors. On 
the other hand, the audit firms of Bigv4 have 
clients of various business fields, thus auditors 
may have many opportunities to expose to the 
reality and that the audit firms of Bigv4 can 
detect and less accept DA against the audit 
firms other than Big 4 
40 Effects of experience years, gender of auditors and audit firm size on firm’ discretionary... 
 Gender of auditors 
The results in Table 2 also show that 
variable GENDER affects negatively variable 
DA. This shows that female auditors accept 
discretionary accruals at a value lower than 
male auditors, which means female auditors 
have more effort in planning audit as well as 
in detecting and preventing the discretionary 
accruals. These results are similar to the 
previous studies on the role of female auditors 
in professional audit being paid much 
attention to in recent period. This research is 
also consistent with the research results of 
Ittonen and Peni (2012) believing that female 
auditors prefer fewer risks than male 
colleagues in professional judgment, and 
female auditors are less affected by clients’ 
explanations which cannot be evaluated than 
male auditors. 
5. Conclusion and Recommendations 
In this research, writers evaluate the 
relationship between audit firm size, gender as 
well as number of experience years of 
auditors and earnings management measured 
through discretionary accruals in 63 
companies listed on Vietnam Stock Market, 
HOSE and HNX, during 2009-2013. The 
research results show that all three variables - 
gender of auditors, the number of experience 
years of auditors and audit firm size affects 
the earnings management through 
discretionary accruals. Female auditors accept 
discretionary accruals at a value lower than 
male auditors. When the number of 
experience years of auditors increases, the 
magnitude of discretionary accruals decreases, 
which means the quality of information in 
financial statements is high. The research also 
finds that the relationship between audit firm 
size and discretionary accruals, which means 
Big 4 audit firms restrict discretionary 
accruals in the companies they audited. 
With these results, writers have some 
recommendations for companies when 
selecting audit firms: need to recognize audit 
firm size, gender, number of experience years 
of auditors contributing to make up a part of 
auditing quality, thereby provide users of 
financial statements with more reliable 
information. For investors, audit reports are 
one of the channels used to assess the quality 
of information in financial statements 
published by companies. The development of 
stock market leads to a large increase of 
investors participating in the market. Thus, the 
audit results of public companies, listed 
companies will attract a large number of 
investors. The research results also provide 
investors with some suggestions to consider 
earnings management by calculating 
discretionary accruals and comparing changes 
over the years in order to detect abnormalities. 
This is a way for investors to evaluate risks 
and make some initial comments on the 
enterprises audited. Besides, the research 
results are also a suggestion for investors to 
access information in the audited financial 
statements. Investors can use information such 
as gender of auditors, number of experience 
years of auditors as a reference to make some 
initial comments when accessing provided 
financial information. 
In addition, this research also has many 
important implications in the field of auditing. 
First, audit and profits adjustment are 
theoretically considered as important issues in 
Vietnam, where there are still very limited 
research. The research finds and quantifies 
three factors including audit firm size, gender, 
number of experience years affecting 
discretionary accruals. All these three factors 
help companies and investors identify and 
evaluate their impact on earnings management 
to make timely decisions. Second, the 
research enriches scientific treasure of profits 
adjustment using Vietnamese data. In 
addition, the research also opens other 
avenues of investigation such as adding 
variable opinion of auditors, using data from 
all companies on both exchanges, expanding 
the number of research years, using other 
models to estimate DA in order to study better 
about profits adjustment in companies listed 
on Vietnam Stock Market 
 Journal of Science Ho Chi Minh City Open University – VOL. 19 (3) 2016 – October/2016 41 
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