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The Impact Of Sarbanes Oxley Act On Cosmetic Earnings Management
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Book Synopsis The Impact of Sarbanes-Oxley Act on Cosmetic Earnings Management by : June Y. Aono
Download or read book The Impact of Sarbanes-Oxley Act on Cosmetic Earnings Management written by June Y. Aono and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the mitigating effect of Sarbanes-Oxley Act on cosmetic earnings management, referred by Kinnunen and Koskela (2003) as earnings manipulative behavior to round earnings such that they result in an upward bias. This behavior reports income numbers to achieve key cognitive reference points represented by N x 10k. Using Benford's law, our analysis compares the distribution of second digits in reported annual earnings for publicly listed U.S. companies between a two-year periods before and after the year 2002 when Sarbanes-Oxley Act went into effect. Our empirical results suggest that, in the two-year period prior to the Act, there was evidence of cosmetic earnings management. However, such behavior in manipulating earnings has noticeably decreased in the period after the Act. This finding is consistent with the notion that Sarbanes-Oxley Act has a deterring impact on corporate America's manipulative behavior to report earnings that achieve certain key reference points.
Book Synopsis The Impact of the Sarbanes-Oxley Act on Earnings Management Using Classification Shifting by : Xudong (Daniel) Li
Download or read book The Impact of the Sarbanes-Oxley Act on Earnings Management Using Classification Shifting written by Xudong (Daniel) Li and published by . This book was released on 2017 with total page 10 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines whether the passage of the Sarbanes-Oxley Act (thereafter, SOX) curbs firms' earnings management behavior through shifting core expenses to special items. The passage of SOX could be an effective deterrent to misclassification activities as it aims to prevent accounting fraud and limit management misbehavior, imposing significant legal liabilities and stiffer penalties on managers for aggressive financial reporting. Alternatively, because classification shifting does not affect reported net income, thereby is less likely to be detected and associated with lower litigation risk, it is likely to be used as a substitute for accruals-based earnings management and therefore experiences an increasing trend in the post-SOX period. Using a sample period from 1988 to 2010, I find evidence consistent with the deterrent effect, that is, the magnitude of unexpected core earnings declines and firms shift fewer core expenses to special items after the passage of the SOX of 2002. My study adds to the literature on the impact of SOX on earnings management by finding that SOX is effective in curbing classification shifting between core earnings and special items, a form of earnings management that misrepresents components of earnings but has no effect on the bottom line income.
Book Synopsis Sarbanes Oxley Effectiveness on the Earning Management by : Rachel Ang
Download or read book Sarbanes Oxley Effectiveness on the Earning Management written by Rachel Ang and published by . This book was released on 2011 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The study examined the degree to which the enactment of Sarbanes-Oxley Act (SOX), specifically Section 404, has impacted earnings management practices among Fortune 500 companies. Companies practice earnings management to (a) be selective about the information on financial performance investors receive, and (b) hide or misrepresent the corporation's true earnings. By examining the impact of regulatory intervention, accounting standard-setting organizations will have the opportunity to measure the strength of statutory oversight. Findings suggested that regulatory intervention through the implementation of SOX reduced the practice of earnings management. The findings enabled leadership to better understand the insight and to offer transformation to the companies' ethical paradigms. As corporate leaders have a fiduciary responsibility to behave ethically and responsibly to provide investors, employees, stakeholders, and the public with the ethically based financial reports.
Book Synopsis The Sarbanes-Oxley Act and Mitigation of Earnings Management by : Caixing Liu
Download or read book The Sarbanes-Oxley Act and Mitigation of Earnings Management written by Caixing Liu and published by . This book was released on 2004 with total page 256 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Impact of the Sarbanes-Oxley Act on Special Items by : Glenn Growe
Download or read book Impact of the Sarbanes-Oxley Act on Special Items written by Glenn Growe and published by . This book was released on 2016 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: The enactment of the Sarbanes-Oxley Act (SOX) contributes to the increase in frequency of special items on income statements. This increase is not concentrated in special item types implicated in earnings management or restructuring activities, nor does it depend on the sign of special items. The frequency increase may result from managers and auditors becoming more diligent in recognizing special items. It is an unintended consequence of SOX that should be considered by regulators in their cost-benefit analysis for SOX.
Book Synopsis The Effect of Sarbanes-Oxley Act and Managerial-entrenchment on Earnings Management and the Value Relevance of Earnings by : Anthony Chi-Yeung Ng
Download or read book The Effect of Sarbanes-Oxley Act and Managerial-entrenchment on Earnings Management and the Value Relevance of Earnings written by Anthony Chi-Yeung Ng and published by . This book was released on 2006 with total page 440 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Earnings Management by : Joshua Ronen
Download or read book Earnings Management written by Joshua Ronen and published by Springer Science & Business Media. This book was released on 2008-08-06 with total page 587 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is a study of earnings management, aimed at scholars and professionals in accounting, finance, economics, and law. The authors address research questions including: Why are earnings so important that firms feel compelled to manipulate them? What set of circumstances will induce earnings management? How will the interaction among management, boards of directors, investors, employees, suppliers, customers and regulators affect earnings management? How to design empirical research addressing earnings management? What are the limitations and strengths of current empirical models?
Book Synopsis The Impact of Increased Disclosure Requirements and the Standardization of Accounting Practices on Earnings Management Through the Reserve for Income Taxes by : Sonja O. Rego
Download or read book The Impact of Increased Disclosure Requirements and the Standardization of Accounting Practices on Earnings Management Through the Reserve for Income Taxes written by Sonja O. Rego and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We examine whether the regulatory changes required by the Sarbanes-Oxley Act of 2002 (SOX) and Financial Accounting Standards Board Interpretation No. (FIN) 48 reduced the propensity for earnings management through the reserve for income taxes. Given prior evidence that firms use this reserve to manage earnings to beat the consensus analyst forecast, the regulatory changes implemented by both SOX and FIN 48 allow us to study the effects of accounting regulation on earnings management. We find that neither SOX nor FIN 48 reduced earnings management through the reserve for income taxes. Thus, in contrast to research that examines whether SOX affected nontax, accrual-based earnings management, our results suggest managers continue to take advantage of their discretion over the accounting for income taxes to beat the consensus analyst forecast in both the post-SOX and post-FIN 48 periods.
Book Synopsis Earnings Informativeness, Earnings Management and Corporate Governance Under the Sarbanes-Oxley Act of 2002 by : Jui-Chin Chang
Download or read book Earnings Informativeness, Earnings Management and Corporate Governance Under the Sarbanes-Oxley Act of 2002 written by Jui-Chin Chang and published by ProQuest. This book was released on 2000 with total page 107 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Detecting Cosmetic Earnings Management Using Benford's Law by : Hamid Mohammadi
Download or read book Detecting Cosmetic Earnings Management Using Benford's Law written by Hamid Mohammadi and published by . This book was released on 2019 with total page 10 pages. Available in PDF, EPUB and Kindle. Book excerpt: Cosmetic earnings management (CEM) is a way of manipulating financial results through small upward rounding of reported earnings. As a result, there will be more than expected zeros and less than expected nines as second digit of earnings numbers. Previous studies showed that cosmetic earnings management has occurred before implementation of Sarbanes-Oxley Act in the U.S and there has been a tendency to exercise it worldwide. This paper investigates the occurrence of CEM in the companies listed in Tehran stock exchange (TSE) during 1999 to 2013 by comparing observed distribution of earning numbers with a standard distribution, called Benford's law. The results show that CEM has not occurred in TSE for the period 1999 to 2009. We suggest users of financial statements to pay attention to earning numbers as a start point for further investigations.
Book Synopsis Research in Accounting Regulation by : Gary Previts
Download or read book Research in Accounting Regulation written by Gary Previts and published by Elsevier. This book was released on 2008-04-09 with total page 333 pages. Available in PDF, EPUB and Kindle. Book excerpt: Research in Accounting Regulation
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.
Book Synopsis The Sarbanes-Oxley Act by : Michael F. Holt
Download or read book The Sarbanes-Oxley Act written by Michael F. Holt and published by Butterworth-Heinemann. This book was released on 2007-11-16 with total page 219 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Sarbannes-Oxley Act (SOX) is a mandatory requirement for all listed corporations in the US, whether foreign or not. Compliance is not an option. Other countries are developing similar legislation so the books value is international in scope. SOX is a hot topic and the effects are just beginning to be felt world-wide. This new book goes beyond the implementation phase of SOX and looks at the reaction to the Act in terms of costs, benefits and business impacts. This book is for Senior Managers in the Business and Financial/Accounting Communities who want/need to know what the reaction of business and government is to the SOX legislation, what it is costing and how the effects are penetrating through the business environment. Mike Holt presents a comprehensive review of the impact that Sarbanes-Oxley legislation has had on business, the financial community, governments and the public since its inception in 2002. The Sarbanes-Oxley Act has been somewhat successful, but not completely and the cost (well over a trillion dollars) might be considered too high a price to pay for the gains. This book takes a hard look at the costs, benefits and other impacts as well as at what influential and prominent financial, government and business leaders think about it now. * International in scope and content and including interviews with prominent business leaders, CEOs and CFOs of large and small corporations. * Compliance with The Sarbanes-Oxley Act is now mandatory for every listed US corporation and overseas corporations listed on US stock markets. * Covers the reaction of business and government to this legislation, what it is costing and how the effects are penetrating through the business environment.
Book Synopsis Trends in Accrual Quality and Real Activity-based Earnings Management in the Pre and Post Sarbanes-Oxley Eras by : Nicholas Christopher Lynch
Download or read book Trends in Accrual Quality and Real Activity-based Earnings Management in the Pre and Post Sarbanes-Oxley Eras written by Nicholas Christopher Lynch and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: An increase in the prevalence of earnings restatements and cases of financial statement fraud in the early 21st century led to a significant loss of market capitalization and investor confidence in the attestation process. In an effort to restore such confidence, Congress passed the Sarbanes-Oxley Act (SOX) in July of 2002. The Act significantly increased the penalties for engaging in accrual activities aimed at either misleading users of the financial statements concerning the underlying economic condition of the firm or influencing contractual outcomes. As a result of the increased penalties for engaging in accrual activities, one would expect a relative shift from accrual activities to real activities to facilitate earnings management in the post-SOX period. As with most academic social disciplines, the test employed in my dissertation is a joint test of the sensitivity of the tools available to detect management activities, the research design, and the presence and strength of the effect for which I am searching. This dissertation is the first to test for changes in both accrual quality and real activity-based earnings management in the post-SOX period. The findings of the study empirically support a change in earnings management techniques in the post-SOX period compared to the pre-SOX period. Specifically, the quality of accruals incorporated into the accounting earnings figure have significantly increased in the post-SOX period. However, instances of earnings management using real activities have also significantly increased in the post-Sox period. These findings inform academics about the power of the tools used in academic accounting research and the overall quality of the argument. They inform users of financial statements about where to direct their attention in reading and evaluating the financials. Finally, they inform regulators, practitioners and policy makers of the effectiveness of the law at improving the quality of accruals, and bring to their attention a potential substitution in the techniques used to manage earnings.
Book Synopsis Trends in Earnings Management and Informativeness of Earnings Announcements in the Pre- and Post-Sarbanes Oxley Periods by : Daniel A. Cohen
Download or read book Trends in Earnings Management and Informativeness of Earnings Announcements 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 44 pages. Available in PDF, EPUB and Kindle. Book excerpt: We document that firms' management of accounting earnings increased steadily from 1987 until the passage of the Sarbanes Oxley Act (SOX), with a significant increase during the period prior to SOX, followed by a significant decline after passage of SOX. However, the increase in earnings management preceding SOX was primarily in poorly performing industries. We also show that the informativeness of earnings increased steadily over time, and there was no significant change in earnings informativeness following the passage of SOX. Further, we find that earnings management increased the absolute informativeness of earnings, but reduced the informativeness for a given earnings surprise, as well as reduced the abnormal return for a given amount of earnings surprise. Finally, the evidence supports the hypothesis that the opportunistic behavior of managers, primarily related to the fraction of compensation derived from options, was significantly associated with earnings management in the period preceding SOX.
Book Synopsis The Routledge Companion to Financial Accounting Theory by : Stewart Jones
Download or read book The Routledge Companion to Financial Accounting Theory written by Stewart Jones and published by Routledge. This book was released on 2015-05-22 with total page 559 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial accounting theory has numerous practical applications and policy implications, for instance, international accounting standard setters are increasingly relying on theoretical accounting concepts in the creation of new standards; and corporate regulators are increasingly turning to various conceptual frameworks of accounting to guide regulation and the interpretation of accounting practices. The global financial crisis has also led to a new found appreciation of the social, economic and political importance of accounting concepts generally and corporate financial reporting in particular. For instance, the fundamentals of capital market theory (i.e. market efficiency) and measurement theory (i.e. fair value) have received widespread public and regulatory attention. This comprehensive, authoritative volume provides a prestige reference work which offers students, academics, regulators and practitioners a valuable resource containing the current scholarship and practice in the established field of financial accounting theory.
Book Synopsis The Mispricing of Real Earnings Management in the Post-Sarbanes-Oxley Era by : Lei Cai
Download or read book The Mispricing of Real Earnings Management in the Post-Sarbanes-Oxley Era written by Lei Cai and published by . This book was released on 2013 with total page 232 pages. Available in PDF, EPUB and Kindle. Book excerpt:
