Arab Journal of Administration المجلة العربية للإدارة


This study aims at exploring the relationship between the external auditor characteristics and the Artificial Adaptation of Accounting Accruals as a method of earnings management in Bahrain,, This was accomplished through reviewing the literature and previous studies related to Accounting Accruals and auditing quality characteristics , then analyzing the relationship between the characteristics of the auditing quality at auditing firms and the possibility of reducing the discretionary accruals , the hypotheses of the study has been tested by examining the impact of quality characteristics of the External Auditor in reducing discretionary accruals in Bahraini Corporations, the study model examined the relationship between the independent variables of quality characteristics of the External Auditor and the dependent variable and of discretionary accruals, as long as the relationship between a set of independent variables and the dependent variable; the appropriate regression model is the multiple regression model. Since the nature of the data was cross section data and the sample was thirty Corporations through time series for the years 2005 to 2009, Therefore, the data were arranged to fit with the model Pooled Data Regression, and as the dependent variable is dummy variable so the suitable test was Binary Logit to examine the relationships between variables using the E-Views The study concluded that the Artificial Adaptation of Accounting Accruals is one of the methods of earnings management, the existence of a positive impact on reducing the discretionary accruals and thus mitigate the earnings management for each of the specialty in client's industry, auditor's qualifications and the relationship with international audit firms. On the other hand there was negative impact on reducing the discretionary accruals for client retention period. Finally, the study recommended the need to provide an environment of high quality of auditing, the establishment of an oversight committee on the quality of external audit in Bahrain, the importance of training and motivating auditors to gain professional certificates and determining the maximum period for client retention in the audit firms.