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Author : Timothy W. Koch
Publisher :
ISBN 13 :
Total Pages : 38 pages
Book Rating : 4.E/5 ( download)
Download or read book The Use of Accruals to Manage Reported Earnings written by Timothy W. Koch and published by . This book was released on 2000 with total page 38 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Amy Yunzhi Zang
Publisher : ProQuest
ISBN 13 : 9780549163251
Total Pages : 120 pages
Book Rating : 4.1/5 (632 download)
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:
Author : Malek El Diri
Publisher : Springer
ISBN 13 : 3319626868
Total Pages : 120 pages
Book Rating : 4.3/5 (196 download)
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.
Author :
Publisher : GRIN Verlag
ISBN 13 : 3964875953
Total Pages : 81 pages
Book Rating : 4.9/5 (648 download)
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.
Author : Paul K. Chaney
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (129 download)
Download or read book The Use of Accruals in Earnings Management written by Paul K. Chaney and published by . This book was released on 2012 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: We suggest and present evidence that managers use discretionary accruals to smooth income around the managers' assessment of the firms' permanent earnings. We suggest that income smoothing is a long-term strategy which accomplishes multiple purposes. We form predictions regarding the direction of discretionary accruals in a given year by comparing income before discretionary accruals to the previous year's reported earnings. We further hypothesize and present evidence that earnings response coefficients which measure the extent to which reported earnings reflect the information used by the market in forming prices are higher for firms that engage consistently in income smoothing.
Author : Timothy W. Koch
Publisher :
ISBN 13 :
Total Pages : 35 pages
Book Rating : 4.:/5 (129 download)
Download or read book The Use of Accruals to Manage Reported Earnings written by Timothy W. Koch and published by . This book was released on 2014 with total page 35 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper develops a model in which firm managers maximize their own compensation by using accruals to manage reported earnings. The results of the model suggest that the form of the managerial compensation function and managerial time preferences may have an important influence on the relationship between accruals and latent earnings. Among the possible relationships suggested by the model are strategies we call Smooth Income, Occasional Big Bath, Live for Today, and Maximize Variability, each of which suggests a different reporting strategy pursued by managers. Most empirical tests of accruals are inconsistent with this and other theoretical models because they include a single earnings variable in a linear regression analysis. Instead, we document the reporting of accruals by two firms, Sunbeam and Citicorp, that is consistent with the quot;Live for Todayquot; and quot;Occasional Big Bathquot; strategies.
Author : Christine I. Wiedman
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book How are Earnings Managed? An Examination of Specific Accruals written by Christine I. Wiedman and published by . This book was released on 2004 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: There is relatively little evidence on the specific accruals used to manage earnings. This paper examines this issue by considering the use of specific accruals in three earnings management contexts: equity offerings, management buyouts, and firms avoiding earnings decreases. We argue that the costs of managing earnings through different income statement items vary and that the benefits of earnings management through each of these items depend upon the context. We thus make differential predictions regarding which specific accrual will be used to manage earnings in each of the three contexts we consider. To measure earnings management for specific accruals, we develop performance-matched measures to capture the unexpected component of accounts receivable, inventory, accounts payable, accrued liabilities, depreciation expense, and special items. Consistent with our predictions, we find that firms issuing equity appear to prefer managing earnings upward by accelerating revenue recognition. Specifically, we find that accounts receivable for these firms are unexpectedly high. Conversely, for the management buyout context we predict and find unexpected accounts receivable to be negative. For firms trying to avoid reporting an earnings decrease, we expect firms to be less concerned with earnings persistence and therefore more likely to use more transitory, and less costly, items to achieve their goal. We find that special items are significantly more positive for this group. This paper provides a further step towards understanding how the incentives behind earnings management affect the method used to achieve earnings goals and also illustrates the usefulness of examining individual accruals in specific contexts.
Author : Sanjay Wikash Bissessur
Publisher : Rozenberg Publishers
ISBN 13 : 9051709870
Total Pages : 217 pages
Book Rating : 4.0/5 (517 download)
Download or read book Earnings quality and earnings management written by Sanjay Wikash Bissessur and published by Rozenberg Publishers. This book was released on 2005 with total page 217 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Joanna Lizińska
Publisher : Taylor & Francis
ISBN 13 : 1040104150
Total Pages : 235 pages
Book Rating : 4.0/5 (41 download)
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.
Author : Joshua Ronen
Publisher : Springer Science & Business Media
ISBN 13 : 0387257713
Total Pages : 587 pages
Book Rating : 4.3/5 (872 download)
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?
Author : Ross L. Watts
Publisher :
ISBN 13 : 9789867491138
Total Pages : 388 pages
Book Rating : 4.4/5 (911 download)
Download or read book Positive Accounting Theory written by Ross L. Watts and published by . This book was released on 2004 with total page 388 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Min Shen
Publisher :
ISBN 13 :
Total Pages : 166 pages
Book Rating : 4.3/5 (129 download)
Download or read book Earnings Management Incentives of Target Firms written by Min Shen and published by . This book was released on 2005 with total page 166 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author : Oliveira, Jonas da Silva
Publisher : IGI Global
ISBN 13 : 1522578188
Total Pages : 342 pages
Book Rating : 4.5/5 (225 download)
Download or read book International Financial Reporting Standards and New Directions in Earnings Management written by Oliveira, Jonas da Silva and published by IGI Global. This book was released on 2019-03-22 with total page 342 pages. Available in PDF, EPUB and Kindle. Book excerpt: The fiscal market is an unpredictable torrent of information that modern organizations strive to understand. Business professionals dedicate themselves to understanding uncertain results around economic performance to improve management, reporting standards, and predict trends in financial statements. International Financial Reporting Standards and New Directions in Earnings Management is an essential reference source that discusses identifying the behavioral patterns of managers and the accounting policies they use in different opportunistic circumstances. Featuring research on topics such as earnings quality, risk reports, and investor protection, this book is ideal for regulatory authorities, accountants, impression managers, auditors, academics, students, and researchers seeking coverage on the theoretical, empirical, and experimental studies that relate to the different themes within earnings management.
Author : Elisa Menicucci
Publisher : Springer Nature
ISBN 13 : 3030367983
Total Pages : 154 pages
Book Rating : 4.0/5 (33 download)
Download or read book Earnings Quality written by Elisa Menicucci and published by Springer Nature. This book was released on 2019-12-21 with total page 154 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book provides an overview of earnings quality (EQ) in the context of financial reporting and offers suggestions for defining and measuring it. Although EQ has received increasing attention from investors, creditors, regulators, and researchers in different areas, there are various definitions of it and different approaches for its measurement. The book describes the relationship between EQ and earnings management (EM) since they can be considered related challenges, especially in the context of international financial reporting standards (IAS/IFRSs). EM occurs when managers make discretionary accounting choices that are regarded as either an efficient communication of private information to improve the informativeness of a firm’s current and future performance, or a distorting disclosure to mislead the firm’s true performance. The intentional manipulation of earnings by managers, within the limits allowed by the accounting standards, may alter the usefulness of financial reporting and lead to lower quality of earnings. The use of fair value in financial reporting has created a current debate about the impact it might have on EQ. At times, the high subjectivity in estimating fair value can allow opportunities for the exercise of management judgments and intentional bias, which can reduce the quality of financial reporting. Management discretion can result in high EM and hence in a reduction of EQ. Particularly during difficult financial periods, managers engage in EM to mask the negative effects of the turmoil, and in such circumstances accruals and earnings smoothing are attempts to reduce abnormal variations of earnings in such circumstances. This book is a valuable resource for those interested in wider perspectives on EQ and it adds to the research studies on this topic in the context of financial reporting.
Author : Zhaoyang Gu
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (137 download)
Download or read book Measuring the Pervasiveness of Earnings Management from Quarterly Accrual Volatility written by Zhaoyang Gu and published by . This book was released on 2008 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: Earnings management is a key issue for financial reporting. The purpose of this paper is to derive a set of indices to measure the pervasiveness of earnings management (PEM) using the properties of quarterly accrual volatility. The PEM index can be viewed as a quality measure of financial reporting and an effectiveness measure for financial monitoring. In contrast to mean-shifting studies in the literature, our measure based on accrual volatility yields two major advantages. First, it relieves us of the necessity of precise assumptions regarding economic events. Second, it provides a macro-perspective on the overall patterns in earnings management. The methodology based on accrual volatility can address issues like the earnings quality, the nature of the informational environment, and the effect of accounting standard setting. The seasonal pattern of accrual volatility can provide a trace of earnings management, even in the absence of further information about specific economic events and resulting managerial actions. Our working hypothesis is that pervasive earnings management leads to the first order stochastic dominance of fourth quarter accrual volatility over the other three quarters. We provide evidence on the relations between previously documented drivers of earnings management and seasonal accrual heteroskedasticity. These drivers include executive compensation, regulatory requirements, bond covenants, and political costs. This empirical support of our working hypothesis validates our application of Kolmogorov-Smirnov (KS) Distance to measure the pervasiveness of earnings management (PEM). We use raw total accruals as the basis for measuring PEM1 and use residuals from Jones? [1991] model to control for mechanical factors in our measurement of PEM2. The usefulness of controls is an empirical issue. Our results suggest that additional controls do not add much power to detect earnings management over and above the simplest measure based on total accruals. KS Distance is powerful in detecting the difference around the central locations of two distributions, but not powerful at the tail ends. We develop two other measures for PEM. First, we estimate the fraction of fourth quarter accruals volatility exceeding the 95th percentile value for the first three quarters (base period) distribution. This fraction, reduced by 5%, constitutes PEM3. Second, we design a simulation method to determine PEM4 as the percentage of firms with a given magnitude of accrual adjustment for the base period accrual volatility to match that of the fourth quarter. Both PEM3 and PEM4 are estimates of percentage of firms involved in earnings management of a given magnitude. However, we should note here that our PEM indices are more likely ordinal than cardinal measures. Though our methods of measuring PEM rely on indirect measurement, we provide direct evidence on the relevance of our method through a series of external validation checks. First, we use a subsample of firms subject to SEC actions relating to alleged earnings manipulation. This data was collected from Accounting and Auditing Enforcement Releases (AAER's) by the SEC. We compare PEM?s for the AAER sample to PEM?s for the COMPUSTAT sample to assess the power of our measures. The PEM indices for the AAER sample are two to three times as large as the PEM indices for the COMPUSTAT sample. Though we avoid interpreting the relative magnitudes literally, these differences do suggest a positive correlation between our PEM indices and the degree of earnings management. Second, we conduct case studies for 10 firms identified by fourth quarter accrual volatility as strongly suspect of earnings management. These studies show that suspect firms frequently engage in activities associated with earnings management, such as CEO turnover, restructuring, public offerings, or they experience losses. Applying our PEM indices to COMPUSTAT data, we find that pervasiveness of earnings management has been relatively stable in the period of 1988-1996.
Author : Wei Yu
Publisher :
ISBN 13 :
Total Pages : pages
Book Rating : 4.:/5 (429 download)
Download or read book Accounting-based Earnings Management and Real Activities Manipulation written by Wei Yu and published by . This book was released on 2008 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: In the first essay, I examine the association between auditor industry specialization and earnings management choices. Prior research suggests that industry specialist auditors constrain accounting-based earnings management. But such actions may cause client companies to seek alternative means to manage earnings. Specifically, companies that hire industry specialist auditors may alter operating decisions to meet earnings targets, referred to as real activities manipulation. This essay investigates whether clients of industry specialist auditors that have an incentive to manage earnings are constrained from managing earnings through accruals manipulation and, therefore, are more likely to engage in real activities manipulation. Further, I examine whether operating performance declines for firms suspected of real activities manipulation. My findings indicate that clients of industry specialist auditors with incentives to manage earnings have lower absolute value of accruals relative to firms with incentives to manage earnings that do not hire industry specialist auditors. These clients of industry specialist auditors are also more likely to engage in real activities manipulation, suggesting this is a possible unintended consequence of hiring an industry specialist auditor. I also document evidence that firms suspected of real activities manipulation have lower future operating performance relative to firms not suspected of real activities manipulation.
Author : Paul Miles Clikeman
Publisher :
ISBN 13 :
Total Pages : 230 pages
Book Rating : 4.:/5 (89 download)
Download or read book Constraints to Earnings Management written by Paul Miles Clikeman and published by . This book was released on 1995 with total page 230 pages. Available in PDF, EPUB and Kindle. Book excerpt:
