Accrual Based And Real Earnings Management

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Real and Accrual-Based Earnings Management in the Pre- and Post-Sarbanes Oxley Periods

Author : Daniel A. Cohen
Publisher :
ISBN 13 :
Total Pages : 52 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Real and Accrual-Based Earnings Management in the Pre- and Post-Sarbanes Oxley Periods by : Daniel A. Cohen

Download or read book Real and Accrual-Based Earnings Management in the Pre- and Post-Sarbanes Oxley Periods written by Daniel A. Cohen and published by . This book was released on 2008 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: We document that accrual-based earnings management increased steadily from 1987 until the passage of the Sarbanes Oxley Act (SOX) in 2002, followed by a significant decline after the passage of SOX. Conversely, the level of real earnings management activities declined prior to SOX and increased significantly after the passage of SOX, suggesting that firms switched from accrual-based to real earnings management methods after the passage of SOX. We also find evidence that the accrual-based earnings management activities were particularly high in the period immediately preceding SOX. Consistent with these results, we find that firms that just achieved important earnings benchmarks used less accruals and more real earnings management after SOX when compared to similar firms before SOX. Finally, our analysis provides evidence that the increases in accrual-based earnings management in the period preceding SOX were concurrent with increases in the fraction of equity based compensation.

Evidence on the Tradeoff Between Real Manipulation and Accrual Manipulation: to 25; Pages:26 to 50; Pages:51 to 75; Pages:76 to 100; Pages:101 to 120

Download Evidence on the Tradeoff Between Real Manipulation and Accrual Manipulation: to 25; Pages:26 to 50; Pages:51 to 75; Pages:76 to 100; Pages:101 to 120 PDF Online Free

Author : Amy Yunzhi Zang
Publisher : ProQuest
ISBN 13 : 9780549163251
Total Pages : 120 pages
Book Rating : 4.1/5 (632 download)

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Book Synopsis Evidence on the Tradeoff Between Real Manipulation and Accrual Manipulation: to 25; Pages:26 to 50; Pages:51 to 75; Pages:76 to 100; Pages:101 to 120 by : Amy Yunzhi Zang

Download or read book Evidence on the Tradeoff Between Real Manipulation and Accrual Manipulation: to 25; Pages:26 to 50; Pages:51 to 75; Pages:76 to 100; Pages:101 to 120 written by Amy Yunzhi Zang and published by ProQuest. This book was released on 2000 with total page 120 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Accrual-Based and Real Earnings Management Activities Around Seasoned Equity Offerings

Author : Daniel A. Cohen
Publisher :
ISBN 13 :
Total Pages : 49 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Accrual-Based and Real Earnings Management Activities Around Seasoned Equity Offerings by : Daniel A. Cohen

Download or read book Accrual-Based and Real Earnings Management Activities Around Seasoned Equity Offerings written by Daniel A. Cohen and published by . This book was released on 2008 with total page 49 pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine earnings management behavior around SEOs, focusing on both real activities and accrual-based manipulation. Although research has addressed the issues of earnings management around SEOs and earnings management via real activities manipulation, ours is the first paper to put these two issues together. We make three contributions to the literature. First, we document that firms use real, as well as accrual-based, earnings management tools around SEOs. Second, we show how the tendency for firms to tradeoff real versus accrual-based earnings management activities around SEO s varies cross-sectionally. We find that firms choices vary predictably as a function of the firm s ability to use accrual management and the costs of doing so. Our model is a first step in examining how firms tradeoff between real versus accrual methods of earnings management. Third, we compare the economic costs of accrual versus real earnings management around SEO s, by examining the effect of each type of earnings management on the firm s future performance. We provide the first evidence on this important issue by showing that the costs of real earnings management are likely greater than the costs of accrual earnings management, at least in the SEO context.

Earnings Management. The Influence of Real and Accrual-Based Earnings Management on Earnings Quality

Author :
Publisher : GRIN Verlag
ISBN 13 : 3964875953
Total Pages : 81 pages
Book Rating : 4.9/5 (648 download)

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Book Synopsis Earnings Management. The Influence of Real and Accrual-Based Earnings Management on Earnings Quality by :

Download or read book Earnings Management. The Influence of Real and Accrual-Based Earnings Management on Earnings Quality written by and published by GRIN Verlag. This book was released on 2024-01-31 with total page 81 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2019 in the subject Business economics - Accounting and Taxes, University of Duisburg-Essen, course: Master Thesis, language: English, abstract: This paper delves into various theories and approaches, aiming to define and differentiate earnings management from related concepts such as fraud, expectation management, and impression management. It explores the goals and incentives driving earnings management, including maximizing or minimizing earnings, beating targets, and smoothing. At the onset of the new millennium, corporate scandals rocked the business world, eroding trust in management, boards of directors, and the accounting profession. In response, regulations and policies aimed at enhancing corporate governance and financial reporting were swiftly implemented. The credibility, clarity, and consistency of financial reporting practices play a pivotal role in enabling investors to make informed decisions. Accurate and fair financial performance representations, as opposed to inflated and misleading figures, are essential for market players, including shareholders and creditors. Investors rely on audited financial reports to guide their investment decisions, underscoring the critical importance of accuracy and reliability in publicly available financial disclosures. Auditors, by reducing the risk of material misstatement, ensure the integrity of the information disclosed in a company's financial statements. Management, with the goal of achieving promised targets and ensuring the company's existence, may engage in earnings management as a strategic contribution to corporate policy. Financial reporting serves as a means to distinguish well-performing companies from their counterparts, facilitating efficient resource allocation and empowering stakeholders to make effective decisions. The disclosed earnings results significantly impact a firm's overall business activities and management decisions, particularly in satisfying analysts' expectations, which can influence equity value. While accounting standards play a role, the quality of financial statements is more influenced by company-specific and institutional factors shaping managers' incentives. These factors lead to financial reporting practices being viewed as the outcome of a cost-benefit assessment.

Accrual-Based and Real Earnings Management in Dynamic Settings

Author : Yutaro Murakami
Publisher :
ISBN 13 :
Total Pages : 43 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Accrual-Based and Real Earnings Management in Dynamic Settings by : Yutaro Murakami

Download or read book Accrual-Based and Real Earnings Management in Dynamic Settings written by Yutaro Murakami and published by . This book was released on 2015 with total page 43 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper develops a simple model to examine the dynamic relationship between earnings management and accounting regulations. In this model, current accrual-based earnings management affects the tightness of future regulations and managers rationally choose the levels of both accrual-based and real earnings management. We compare this dynamic model with the static one where the tightness of regulations is not affected by past levels of accrual-based earnings management and is, thus, constant over time. Our analysis reveals that accounting regulations directly affect relative costs of accrual-based and real earnings management in both static and dynamic settings, which is consistent with prior empirical and analytical studies. More importantly, we find that the impact of the change in manager's time horizon may be different for static and dynamic models of regulations. We also find that the initial state of the economy affects how managers adjust the levels of earnings management over time.

Accrual-Based and Real Earnings Management Before and After IFRS Adoption

Author : Aikaterini Ferentinou
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Accrual-Based and Real Earnings Management Before and After IFRS Adoption by : Aikaterini Ferentinou

Download or read book Accrual-Based and Real Earnings Management Before and After IFRS Adoption written by Aikaterini Ferentinou and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Purpose: The aim of this study is to examine the use of accrual-based vs. real earnings management by Greek firms, before and after the mandatory adoption of International Financial Reporting Standards (IFRS). The research is motivated by the fact that past studies have indicated the existence of significant levels of earnings management (EM) for Greece in particular before IFRS.Design/methodology/approach: Accrual-based earnings management (AEM) is examined by assessing performance-adjusted discretionary accruals, while real earnings management (REM) is defined in terms of abnormal levels of production costs, discretionary expenses, and cash flows from operations, for a three-year period before and after the adoption of IFRS in 2005.Findings: We find evidence on a statistically significant shift from AEM to REM after the adoption of IFRS, indicating the replacement of one form of EM with the other. Research limitations/implications: The validity of the results depends on the ability of the empirical models used to efficiently capture the existence of AEM and REM.Practical implications: IFRS adoption aims to improve accounting quality, especially in countries with high need for such an improvement; however, the tendency to substitute one form of EM with another highlights unintended consequences of IFRS adoption, which do not improve the informational content of financial statements if EM continues under different forms.Originality/value: Under the expectation that IFRS adoption should lead to improvements in accounting quality, this study examines whether IFRS actually led to a reduction of EM practices for a country with exceptionally high levels of EM before IFRS, by accounting for all possible forms of EM.

Accrual-Based and Real Earnings Management and Political Connections

Author : Geert Braam
Publisher :
ISBN 13 :
Total Pages : 47 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Accrual-Based and Real Earnings Management and Political Connections by : Geert Braam

Download or read book Accrual-Based and Real Earnings Management and Political Connections written by Geert Braam and published by . This book was released on 2015 with total page 47 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines whether the trade-off between real and accrual-based management strategies differs between firms with and without political connections. We argue that politically-connected firms are more likely to substitute real earnings management for accrual-based earnings management than non-connected firms. Although real earnings management is more costly, we expect that politically connected firms prefer this strategy because of its higher secrecy and potential to mask political favors. Using a unique panel data set of 5,493 publicly traded firms in 30 countries, our results show that politically-connected firms are more likely to substitute real earnings management strategies for accrual-based earnings management strategies than non-connected firms. We also find that when public monitoring and therefore the risk of detection increases, politically connected firms are more likely to resort to less detectable real earnings management strategies. Our finding that political connections play a significant role in the choice between accrual-based and real earnings management strategies suggests that a focus only on accrual-based measurements underestimates the total earnings management activities of politically-connected firms.

Introduction to Earnings Management

Author : Malek El Diri
Publisher : Springer
ISBN 13 : 3319626868
Total Pages : 120 pages
Book Rating : 4.3/5 (196 download)

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Book Synopsis Introduction to Earnings Management by : Malek El Diri

Download or read book Introduction to Earnings Management written by Malek El Diri and published by Springer. This book was released on 2017-08-20 with total page 120 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book provides researchers and scholars with a comprehensive and up-to-date analysis of earnings management theory and literature. While it raises new questions for future research, the book can be also helpful to other parties who rely on financial reporting in making decisions like regulators, policy makers, shareholders, investors, and gatekeepers e.g., auditors and analysts. The book summarizes the existing literature and provides insight into new areas of research such as the differences between earnings management, fraud, earnings quality, impression management, and expectation management; the trade-off between earnings management activities; the special measures of earnings management; and the classification of earnings management motives based on a comprehensive theoretical framework.

Accrual-Based and Real Earnings Management

Author : Masahiro Enomoto
Publisher :
ISBN 13 :
Total Pages : 40 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Accrual-Based and Real Earnings Management by : Masahiro Enomoto

Download or read book Accrual-Based and Real Earnings Management written by Masahiro Enomoto and published by . This book was released on 2017 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the differences in accrual-based and real earnings management across countries from the perspective of investor protection. Following prior research (Leuz et al., 2003), we hypothesize that accrual-based earnings management is more constrained by strict discipline in countries with stronger investor protection. For real earnings management in countries with stronger investor protection, we have two hypotheses. One is that real earnings management is more often implemented to substitute for accrual-based earnings management. The other is that real earnings management is less often implemented, as with accrual-based earnings management. Our examination uses data from 222,513 firm-year observations drawn from 38 countries covering 1991 to 2010. The results show that managers in countries with stronger investor protection tend to engage in real earnings management instead of accrual-based earnings management. We also find that real earnings management is constrained by analyst following. Our results are not affected by the control of audit quality or the calculation method used for earnings management measures according to country and year.

Accrual-based and Real Earnings Management

Author : Fumihiko Kimura
Publisher :
ISBN 13 :
Total Pages : 37 pages
Book Rating : 4.:/5 (931 download)

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Book Synopsis Accrual-based and Real Earnings Management by : Fumihiko Kimura

Download or read book Accrual-based and Real Earnings Management written by Fumihiko Kimura and published by . This book was released on 2015 with total page 37 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Substitution And Complementary Effects Of Accrual-Based Earnings Management And Real Earnings Management

Author :
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (934 download)

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Book Synopsis Substitution And Complementary Effects Of Accrual-Based Earnings Management And Real Earnings Management by :

Download or read book Substitution And Complementary Effects Of Accrual-Based Earnings Management And Real Earnings Management written by and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:

The Relation Between Auditors' Fees for Non-Audit Services and Earnings Quality

Author : Frankel Richard M
Publisher : Franklin Classics
ISBN 13 : 9780343108434
Total Pages : 0 pages
Book Rating : 4.1/5 (84 download)

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Book Synopsis The Relation Between Auditors' Fees for Non-Audit Services and Earnings Quality by : Frankel Richard M

Download or read book The Relation Between Auditors' Fees for Non-Audit Services and Earnings Quality written by Frankel Richard M and published by Franklin Classics. This book was released on 2018-10-14 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This work has been selected by scholars as being culturally important and is part of the knowledge base of civilization as we know it. This work is in the public domain in the United States of America, and possibly other nations. Within the United States, you may freely copy and distribute this work, as no entity (individual or corporate) has a copyright on the body of the work. Scholars believe, and we concur, that this work is important enough to be preserved, reproduced, and made generally available to the public. To ensure a quality reading experience, this work has been proofread and republished using a format that seamlessly blends the original graphical elements with text in an easy-to-read typeface. We appreciate your support of the preservation process, and thank you for being an important part of keeping this knowledge alive and relevant.

Real Earnings Management and Accrual-Based Earnings Management in Family Firms

Author : Ann-Kristin Achleitner
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Real Earnings Management and Accrual-Based Earnings Management in Family Firms by : Ann-Kristin Achleitner

Download or read book Real Earnings Management and Accrual-Based Earnings Management in Family Firms written by Ann-Kristin Achleitner and published by . This book was released on 2019 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine the effects of family firms on real earnings management (REM) and accrual-based earnings management (ABEM). Using socioemotional wealth (SEW) as a theoretical framework and considering the different implications of REM and ABEM on family firms' transgenerational sustainability, we hypothesize and find for a sample of 402 German listed family firms during 1998-2008, that family firms engage less in REM and exhibit more earnings-decreasing ABEM policies as compared to a sample of 436 non-family firms. We further provide evidence that family firms as compared to non-family firms treat REM and ABEM as substitute rather than complementary tools for earnings management. Overall, our findings suggest that family firms use earnings management activities strategically, avoiding those that inhibit the firm's long-term value (i.e. REM) and engaging in those that help families retain transgenerational control (i.e. ABEM).

Audit Committee Interlocks and the Contagion of Accrual-Based and Real Earnings Management

Author : Ravi Dharwadkar
Publisher :
ISBN 13 :
Total Pages : 46 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Audit Committee Interlocks and the Contagion of Accrual-Based and Real Earnings Management by : Ravi Dharwadkar

Download or read book Audit Committee Interlocks and the Contagion of Accrual-Based and Real Earnings Management written by Ravi Dharwadkar and published by . This book was released on 2016 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt: Cohen et al. (2008) document that firms switched from accrual-based earnings management (AEM) to real earnings management (REM) within three years after passage of the Sarbanes-Oxley Act (SOX) in 2002. A remaining question is how so many firms could have made the transition from one accounting practice to another in such a short period of time. We investigate a hidden mechanism underlying this large-scale, accelerated transfer of accounting knowledge. Our study reveals that audit committee interlocks facilitated firms' post-SOX substitution from AEM to REM, contributed to the contagion of AEM before SOX and to the contagion of REM after SOX. Our results are robust for subsamples of intangible-intensive firms and manufacturing firms, which are more susceptible to REM. We further create a REM-AEM substitution index and find that the contagion of substitution from AEM to REM was disseminated through audit committee interlocks. Overall, we identify audit committee interlocks as a significant channel for transmitting accounting information between firms.

Earnings management im Wandel

Author : Patrick Meyer
Publisher :
ISBN 13 :
Total Pages : 46 pages
Book Rating : 4.:/5 (871 download)

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Book Synopsis Earnings management im Wandel by : Patrick Meyer

Download or read book Earnings management im Wandel written by Patrick Meyer and published by . This book was released on 2013 with total page 46 pages. Available in PDF, EPUB and Kindle. Book excerpt:

A Synthesis and Analysis of Models Measuring Accrual Based and Real Activities Earnings Management

Author : Anna-Fani Constantatos
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis A Synthesis and Analysis of Models Measuring Accrual Based and Real Activities Earnings Management by : Anna-Fani Constantatos

Download or read book A Synthesis and Analysis of Models Measuring Accrual Based and Real Activities Earnings Management written by Anna-Fani Constantatos and published by . This book was released on 2016 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This chapter provides a description of the nowadays most commonly used methods for measuring earnings management in the accounting and finance literature. First, it covers the most important and commonly used models of accrual based earnings management (i.e., Jones, 1991; Dechow et al., 1995; Teoh et al., 1998 a, b; DeFond and Park, 2001; Dechow and Dichev, 2002; Larcker and Richardson, 2004; Kothari et al., 2005 and Dechow et al., 2012). In sequence, it describes the most important and commonly used models that examine real activities earnings management (Roychowdhury, 2006; Gunny, 2010). Finally, the chapter summarises briefly the most common determinants and motives for earnings management. On that basis, this chapter provides a practical guidance on how scholars can apply earnings management models, after considering their advantages and disadvantages. It also considers the suggested solutions offered in the literature, which aim to overcome problems in their implementation.

Earnings Management and Corporate Finance

Author : Joanna Lizińska
Publisher : Taylor & Francis
ISBN 13 : 1040104150
Total Pages : 235 pages
Book Rating : 4.0/5 (41 download)

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Book Synopsis Earnings Management and Corporate Finance by : Joanna Lizińska

Download or read book Earnings Management and Corporate Finance written by Joanna Lizińska and published by Taylor & Francis. This book was released on 2024-07-01 with total page 235 pages. Available in PDF, EPUB and Kindle. Book excerpt: In today's dynamic landscape of accounting, corporate finance, and business management, earnings management has assumed paramount importance. Transparent and reliable accounting information is crucial for accurate corporate performance forecasting and financial decision-making. This book uniquely discusses practical earnings management methods within the accounting and taxation realms. It is supported by extensive international evidence linking informativeness of financial reports to companies’ financial decisions. Delving into the earnings management process, this book provides profound insights into how profits can be influenced through accounting choices and real business transactions. Real-life case studies will undoubtedly facilitate the understanding of accounting and taxation methods. Additionally, it unravels key elements of corporate finance puzzles related to the transparency of financial reports, including the macroeconomic environment, profit thresholds, cash management, audit quality, financing decisions, and financial health. With broad empirical evidence from various European countries, it multidimensionally explores the important link between the quality of information in financial statements and trade-offs behind financial decisions. The book serves as a valuable reference for international researchers in corporate finance, accounting, and corporate governance. It is also a powerful tool for business practitioners, including owners, lenders, auditors, regulatory and professional bodies, business partners, or other market participants. For those seeking the latest insights on earnings management, those producing or assessing accounting information, and those using financial reports in their research or business practice, this book is a must-read.