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Valentinčič, Aljoša. "Accounting conservatism, earnings components and accounting losses." Thesis, University of Glasgow, 2004. http://theses.gla.ac.uk/1137/.
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This study provides evidence on accounting conservatism based on a large sample of publicly-quoted UK companies over the period 1969-2001. The effects of conservation accounting are studied both indirectly and directly by using earnings measures containing varying levels of accruals and by further decomposing earnings into its operating cash flows and distinct accruals components. The analyses are also separated according to the sign of earnings and earnings components, and account for the effects of asset-recognition rules. Even though conservatism is an accruals phenomenon, this is the first study to provide direct empirical evidence on the role of accruals in accounting conservatism. The thesis addresses the following issues. First, under conservative accounting, earnings-decreasing changes in performance measures (reflecting economic losses) that contain more accruals mean-revert more and earnings-increasing changes (reflecting economic gains) are persistent. Working capital accruals and special items are particularly strongly mean-reverting when they are earnings-decreasing. Depreciation accruals are persistent. Second, direct tests by earnings components show that operating cash flows exhibit low timeliness overall and, given that they contain no accruals, no asymmetry in reflecting bad news. Earnings figures with more accruals exhibit more asymmetry in reflecting bad news. Working capital accruals and special items are important in this asymmetry, but depreciation is not. Interestingly, good news results in a small earnings-decreasing charge, consistent with smoothing. Lagged tests on accruals reveal that bad news from as much as three previous periods is reflected in current earnings through special items, inconsistent with conservatism. Evidence indicates that conservatism is increasing through time. The sensitivity to good news has decreased over time. To capture these changes, higher-moments measures are developed. Third, the analysis by the sign of “bottom-line” earnings does not reveal any differences in reflecting good/bad news for the profit/loss firms. Separating earnings observations by sign of cash flow also reveals no differences. In contrast, separating observations by the sign of accruals (other than depreciation) reliably shows that the asymmetric timeliness is significantly higher in the negative-accruals groups, as expected. The accruals components determine this asymmetry, rather than the operating cash flow (or, earnings by itself). Finally, less conservative recognition rules lead to stronger responsiveness of earnings to bad news, as reflected in working capital accruals and special items. Asset-specific measures of conservative recognition rules reinforce these findings. A puzzling result is that operating cash flows reveal a significant asymmetric response to bad news in the group of observations where it is least-likely to be observed (low book to market). A selection of other results by size, industry, extremity of news, methods, accounting year-ends, market-wide returns, yields, method of estimation, etc., not only corroborates, but generally strengthens the results obtained.
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Izadi, Zadeh Darjezi Javad. "Interim accounting earnings and price momentum." Thesis, University of Sussex, 2012. http://sro.sussex.ac.uk/id/eprint/43336/.
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We know that managers may use their discretion by structuring transactions that can alter financial reports in order to persuade stockholders in their interpretation of the underlying economic performance of the company. The study reported in this thesis examines such earnings discretion in the six monthly interim reports issued by listed firms in the UK, and investigates the relationship between estimates of earnings manipulation and the market pricing of the firm's shares. This is tested by examining whether managers use their discretion to sustain earnings trends in the case of ‘winner' firms, i.e. those that are in the upper range of prior returns, and likewise to keep a negative trend in ‘loser' firms, those in the lower range of prior returns. Specifically, momentum portfolios are formed based on past six-month returns and tested for differences in future six-month earnings management, as measured by discretionary current accruals in six month interim reporting periods. The results suggest that discretionary current accruals are significantly associated with past returns for winner more than loser firms, and hence that past returns may contribute to the explanation of future earnings management, the behaviour being consistent with appearing either to persist as winners or to turn losers around
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Siagian, Ferdinand Tumindi. "Earnings manipulation and the association between CEO bonus and accounting earnings /." view abstract or download file of text, 2002. http://wwwlib.umi.com/cr/uoregon/fullcit?p3061966.
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Thesis (Ph. D.)--University of Oregon, 2002.Typescript. Includes vita and abstract. Includes bibliographical references (leaves 58-59). Also available for download via the World Wide Web; free to University of Oregon users.
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Pimentel, Renê Coppe. "Accounting earnings properties and determinants of earnings response coefficient in Brazil." Universidade de São Paulo, 2009. http://www.teses.usp.br/teses/disponiveis/12/12136/tde-30012010-095104/.
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A fundamental issue at the interface of economics, finance, and accounting involves the relation between a firm\'s reported earnings and its stock returns. The lack of research in this field using Brazilian data and the limitations of previous research in terms of time-series data (small length available) motivates the present research. In addition, the practical justification of this research is that time-series properties of accounting earnings and the determinants of Earnings Response Coefficient (ERC) have a direct application in earnings forecasting and the valuation process. Based on this, the general objectives of this dissertation are to analyse the earnings time-series properties and to find the economic determinants of ERC in Brazil. Consequently, this dissertation is divided into three main sections/studies: (1) An analysis of the time-series properties of accounting earnings and the long-term relationship among price, return and earnings; (2) An analysis of the relevance and significance of ERC for individual companies and pooled data; and, (3) Elucidation of the economic determinants of ERC in Brazil. In order to achieve these objectives, quarterly and annual data were gathered and analysed. The quarterly sample is composed by 71 firms with quarterly data from the first quarter of 1995 until first quarter of 2009 (57 time-observations), and the annual sample is composed by 61 firms and annual observations from 1995 to 2008 (14 time-observations). Two measures of accounting earnings (SEPS and UNEPS) and two measures of stock returns (RET and ARET) were used. Additionally, proxies of systematic risk (BETA), expected economic growth opportunity (GRO), leverage (LEV), risk-free interest rate (INTER) and size (SIZE) were used as measures of the economic determinant of ERC. In each study, the two different measures of earnings and returns resulted in a combination of four functional models (regressions), in an annual and a quarterly basis. These models were estimated into firm-specific level and pooled data by using different methods (OLS and GLS); these varieties of designs, periodicity and estimations provide a robust analysis. The results of the first study show that earnings present, for most firms, stationarity series and seasonal fluctuation. The evidence also suggests that the accounting earnings in Brazil follow an auto-regressive model AR(1). Test results indicate long-term relationships between earnings and prices/returns, although, it is not possible to robustly infer about the Granger causality direction since a general behaviour was not identified. The second study indicates that for annual and quarterly firm-specific regressions between earnings and stock returns, only a few companies presented a significant relationship. However, the annual pooled analysis presents positive and significant coefficients, and contemporaneous observations (at t level) seem to fit better in the models than the lagged variable of return. Cross-sectional weight in the panel aggregates some refinement to the models in terms of significance and explanatory power. In the quarterly pooled regressions, coefficients with statistical significances were found; nevertheless, these regressions report an extremely low or nonexistent explanatory power, suggesting a slight relationship between the variables. The results of the third study show that systematic risk, interest rates and size significantly explain cross-sections and intertemporal variations of ERC according to previous hypothesis. On the other hand, differently from what has been hypothesized, expected economic growth and leverage do not significant explain cross-section variations of ERC in Brazil. Since the interest rate level in Brazil is higher than those in developed countries and given that interest rate levels affect both earnings and discount rate, the regressions presented different signals according to the proxy for return used. Finally, it is possible to conclude that, by including the significant factors noted above, the empirical specification of the earnings-returns relation is significantly improved, however, given some contrasting results presented here, this dissertation advocates for further research in this field.Um desafio fundamental que interliga economia, finanças e contabilidade envolve a relação entre lucros contábeis divulgados e o retorno das ações. A falta de pesquisa nesta área utilizando dados brasileiros e a limitação das pesquisas anteriores devido à falta de séries temporais adequadas (as séries disponíveis são curtas) motivam a presente pesquisa. Adicionado a isso, uma justificativa pragmática é que a propriedade temporal dos lucros contábeis e os determinantes do Coeficiente de Resposta ao Lucro (ERC) têm aplicação direta na previsão de lucros e em processos de valuation. Baseado nisso, o objetivo geral desta tese é analisar as propriedades estocásticas do lucro contábil e encontrar os determinantes econômicos do ERC no Brasil. Para isso, a tese está dividida em três seções/estudos: (1) Análise as propriedades dos lucros contábeis e a relação de longo prazo entre preço das ações, retorno e lucros; (2) Análise a relevância e significância do ERC por empresa e em dados agrupados (pooling); e, (3) Teste dos determinantes econômicos do ERC. Para atingir tais objetivos, dados trimestrais e anuais foram coletados e analisados. A amostra trimestral é composta por 71 empresas entre o 1º trimestre de 1995 e o 1º trimestre de 2009 (57 observações trimestrais) e a amostra anual é composta por 61 empresas com observações anuais entre 1995 a 2008 (14 observações anuais). Duas medidas para lucro contábil (SEPS e UNEPS) e duas medidas de retorno das ações (RET e ARET) foram utilizadas. Adicionalmente, proxies para risco sistemático (BETA), oportunidades de crescimento econômico esperado (GRO), alavancagem (LEV), taxa de juros livre de risco (INTER) e tamanho (SIZE) foram utilizadas como medidas de determinantes econômicos do ERC. Em cada estudo, as duas medidas de lucro e de retorno resultaram em uma combinação de quatro modelos funcionais (regressões), em uma base anual e uma trimestral. Tais modelos são estimados individualmente nas empresas e por agrupamento de dados (pooling) por meio de diferentes métodos (OLS e GLS); essa variedade de modelagem, periodicidade e estimação proporcionam uma análise mais robusta. Os resultados do primeiro estudo mostram que os lucros apresentam, para a maioria das empresas, séries estacionárias e com flutuações sazonais. As evidências também sugerem que os lucros no Brasil seguem um modelo autoregressivo de ordem um - AR(1). Os resultados dos testes indicam a existência de relacionamento de longo prazo entre lucro e retorno, no entanto, não é possível inferir de forma robusta sobre a direção da causalidade de Granger visto que não foi encontrada uma tendência geral para os dados. O segundo estudo indica que poucas empresas apresentaram regressões com coeficientes significantes. No entanto, a análise com dados agrupados apresenta coeficientes positivos e significantes, sendo que as observações em períodos similares (no nível t) aparentam melhor adequação do que variável de retorno defasada. Atribuição de peso em variação transversal (cross-sectional) no painel de dados agrega maior refinamento nos modelos em termos de significância e poder explicativo. Nas regressões trimestrais agrupadas, coeficientes com significância estatística foram encontrados; entretanto, essas regressões indicam um poder explicativo extremamente baixo ou inexistente, sugerindo um pequeno relacionamento entre as variáveis. Os resultados do terceiro estudo mostram que risco sistemático, taxa de juros e tamanho explicam com significância estatística as variações temporais e transversais do ERC de acordo com hipóteses prévias. Por outro lado, diferentemente do hipotetizado por estudos anteriores, oportunidades de crescimento econômico esperado e alavancagem não explicam com significância as variações transversais do ERC no Brasil. Visto que a taxa de juros no mercado brasileiro é significativamente maior do que em países desenvolvidos e que a taxa de juros afeta tanto a geração de lucros quanto a taxa de desconto, a regressões apresentaram sinais diferentes de acordo com a proxy de retorno utilizada (RET ou ARET). Finalmente é possível concluir que, ao incluir os fatores estatisticamente significantes, apresentados acima, a especificação empírica da relação lucro/retorno é significativamente melhorada, entretanto, considerando que alguns resultados contraditórios foram verificados, esta tese advoga por maiores pesquisas neste campo.
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Jin, Qinglu. "Business cycle, accounting behavior and earnings management /." View abstract or full-text, 2005. http://library.ust.hk/cgi/db/thesis.pl?ACCT%202005%20JIN.
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Liang, Yi. "Essays in Accounting Regulation and Earnings Management." Research Showcase @ CMU, 2015. http://repository.cmu.edu/dissertations/513.
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Chan, Ling-Ching. "Accounting conservatism, earnings quality, and firm valuation." Thesis, University of Manchester, 2005. http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.629937.
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This thesis explores the relation between conservatism and earnings quality, and its economic consequences. The principle of conservatism has played an important role in dealing with uncertainties in the process of financial reporting. In the past ten years, substantial market-based accounting research has been devoted to the study of conservatism but few studies have attempted to examine how the nature of conservatism affects earnings quality from an information perspective and whether conservative accounting provides information that is useful in helping investors make investment decisions. The present work provides UK evidence on the relation between accounting conservatism and several earnings attributes and on how this relation affects investors' required rates of return. It comprises three major pieces of empirical work. First, I investigate the effect of earnings components--cash flow from operations, operating and non-operating accruals--on earnings conservatism using three different regression models. These are the augmented forward and reverse return--earnings regressions, and the earnings persistence regressions. The results show that non-operating accruals has the most significant effect on estimates of conservatism in all three models. Second, I examine the association between ex-ante/ex-post conservatism and several earnings characteristics: the value-relevance, informativeness, persistence, and predictability of reported earnings. These earnings attributes are important determinants of earnings quality from an information perspective and greater values of these earnings attributes imply that reported earnings are more useful for decision-making purposes. The results show that ex-ante (balance sheet) conservatism has a positive relation with earnings quality. However, there is no direct relation between ex-post (earnings) conservatism and earnings quality, and extreme ex-post conservatism may undermine the quality of reported earnings. Third, I examine how the relation between conservatism and earnings quality affects investors' required rates of return. I find that higher ex-ante conservative earnings are related to lower costs of equity capital and that there is no significant relation between ex-post conservatism and investors' required rates of returs. Based on the findings in this thesis, I conclude that accounting conservatism is an essential concept in financial reporting and that investors understand the nature of conservatism and price firm value rationally.
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Chen, Keji. "Earnings aggregatiion and valuation." The Ohio State University, 2003. http://rave.ohiolink.edu/etdc/view?acc_num=osu1059674409.
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Wang, X. (Xin). "Earnings management to meet analysts’ forecasts." Master's thesis, University of Oulu, 2016. http://urn.fi/URN:NBN:fi:oulu-201606082469.
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The object of this thesis is to investigate the tool of earnings management firms use to meet analysts’ forecasts and then provide evidence for setting slightly meet and slightly miss as indicator of earnings management. Managers have sort of incentives to meet analysts’ forecasts. In the prior literature, managers have more motivations to meet analysts’ forecasts through earnings management than real activities. I argue that managers will manipulate discretionary accruals in order to beat analysts’ forecasts. And I also argue that slightly meet and slightly miss could be an indicator of earnings management.
In the empirical examination, I use discretionary accrual as proxy of earnings management and recalculate it using Jones (1991). Meet analysts’ forecasts are calculated as the difference between actual EPS and forecasts EPS. A frequency test of Meet is presented as well. The result show: (1) Frequency table gives a higher frequency in slightly beat analysts’ forecasts than other situations. (2) A significant positive correlation between slightly meet and miss and discretionary accrual, which capture that if firm try to get close to analysts’ forecast, the discretionary accruals will inceases. This significant correlation also gives strong support to set slightly meet and miss as an indicator of earnings management.
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Pae, Jinhan. "Earnings management and its impact on the information content of earnings and the properties of analysts forecasts." Thesis, National Library of Canada = Bibliothèque nationale du Canada, 1999. http://www.collectionscanada.ca/obj/s4/f2/dsk1/tape7/PQDD_0023/NQ38951.pdf.
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Elseraiti, Alhussien Ramadan. "Earnings management in the Libyan corporations." Thesis, University of Gloucestershire, 2011. http://eprints.glos.ac.uk/3262/.
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International accounting scandals around the world have triggered a wave of interest and discussion on the transparency and integrity of financial statements. Prior literature has stated that due to a variety of motivations and by using different techniques, the management of corporations might intend to influence the figures in financial reporting. The preferred term used in the accounting literature to describe this issue is 'earnings management', which is a very interesting and topical issue for researchers. Therefore, this research investigates the earnings management phenomenon in the Libyan environment. In this research, secondary data, which was accruals-based models, and primary data analysis, which included a questionnaire survey combined with semi-structured interviews, were used to achieve the objectives of this research, that are: to determine the existence and the direction of earnings management in the Libyan context; the motivations and techniques behind that; and the earnings management constraints, which include internal accounting standards, corporate governance mechanism and audit quality. The analysis of secondary data examined the existence and the direction of earnings management in Libyan companies. Accruals-based models were applied on a sample of state-owned and private companies. The results indicated that the majority of the companies that engaged in earnings management by using income-increasing policies accruals were state-owned companies. However, the majority of the companies that engaged in earnings management by using income-decreasing policies accruals were private companies. The above results indicated that there are linkages between the direction of earnings management and the nature of company ownership in the Libyan environment. Further, as regards the relationship between the direction of earnings management and company size, the results of the state-owned companies group indicated that company size was positively and significantly associated with discretionary total accruals. On the other hand, the results of the private companies group indicated that company size was negatively and significantly linked to discretionary total accruals. The primary data analysis was used to investigate three main issues: the motivations behind the practice of earnings management; the most frequently used techniques to practice earnings management; and the earnings management constraints, which include accounting standards, internal corporate governance mechanism and audit quality. These subjects were investigated by using a questionnaire survey administered to external auditors, financial managers and senior accountants, internal auditors, lenders, tax officers and accounting academics. Also, a series of semistructured interviews was combined with the questionnaire survey, which was conducted with selected respondents to the survey. Results indicated that the main incentives for practising earnings management in Libyan state-owned companies were: to mitigate the threat of displacement (i.e. safeguard job position) and/or enhance management reputation, to report profits, to increase the value of management compensation, and to meet regulatory objectives. On the other hand, the main incentives for the private companies were to decrease the amount of taxes and to enhance the chance of obtaining bank loans. Further, the results showed that manipulation of the value of inventory, improper assets revaluation, incorrect capitalising rather than expensing of expenditures, manipulation of accrual estimation, incorrect use of expenses on asset acquisition, and related-party transactions were the most frequently used techniques to practice earnings management in Libya. Finally, the results showed a consensus among respondents on the importance of accounting standard. internal corporate governance mechanisms, audit quality as policies to constraint earnings management in the Libya environment.
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Yu, Jiewei. "Loan spreads and unexpected earnings." Columbus, Ohio : Ohio State University, 2007. http://rave.ohiolink.edu/etdc/view?acc%5Fnum=osu1180535745.
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Bryan, Daniel Mitchell. "The effects of persistence, growth, and conservative accounting on the association of accounting information with market value /." view abstract or download file of text, 2002. http://wwwlib.umi.com/cr/uoregon/fullcit?p3061936.
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Thesis (Ph. D.)--University of Oregon, 2002.Typescript. Includes vita and abstract. Includes bibliographical references (leaves 93-96). Also available for download via the World Wide Web; free to University of Oregon users.
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Ge, Wen Xia. "Essays on Real Earnings Management." Thesis, McGill University, 2009. http://digitool.Library.McGill.CA:80/R/?func=dbin-jump-full&object_id=66691.
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The purpose of this thesis is to examine the economic consequences of and constraints on real earnings management. My thesis consists of two essays. In the first essay, I examine the association between real earnings management and the cost of new corporate bond issues. Three types of real earnings management are considered: sales manipulation, overproduction and abnormal reduction of discretionary expenditures. Using the sample from 1993 to 2004, I find that cost of debt is negatively related to the proxies for sales manipulation, abnormal reduction of discretionary expenses and the overall real earnings management for firms without using stock options to compensate their managers. When managerial compensation is linked to option awards, however, the negative association between real earnings management and cost of debt is attenuated. Overproduction does not show a significant effect on bond yield spread. Overall, these results suggest that, in the primary bond market, mispricing of real earnings management exists, especially for firms that do not have executive stock option plans. In the second essay, I investigate the effect of quality board and takeover protection on real earnings management. Four types of real earnings management are considered in this essay: sales manipulation, overproduction, abnormal reduction of R&D expenses and abnormal reduction of discretionary expenditures (other than R&D). Using panel data from U.S. public firms in the post-Sarbanes-Oxley Act period (2004-2006), I find that the level of real earnings management (abnormal decline in R&D expenses and other discretionary expenses) increases with better board governance and decreases with higher takeover protection. The effects of these two governance factors on sales manipulation and overproduction cost are weak. Overall, the results suggest that the monitoring role of boards may put short-term market pressure on managers,Cette thèse à pour objectif d'examiner les conséquences économiques autant que les contraintes sur la vraie gestion de revenus. Ma thèse se compose de deux essais. Dans le premier essai, j'ai examiné la relation entre la vraie gestion de revenus et le coût des nouveaux emprunts obligataires d'une entreprise. Trois scénarios de vraie gestion de revenus sont considérés : la manipulation de ventes, l'effect de surproduction et enfin, la réduction anormale de dépenses discrétionnaires. En utilisant l'échantillon provenant de l'an 1993 à 2004, j'ai constaté que le coût de la dette est négativement relié aux procurations de la manipulation de ventes, de la réduction anormale de dépenses discrétionnaires et de la vraie gestion globale de revenus pour les sociétés qui n'emploient pas les options d'achat d'actions comme méthodes compensatoires exécutifs. Cependant, quand la compensation gestionnaire est reliée aux récompenses d'option, l'association négative entre de vrais revenus gestion et le coût de dette est diminuée. Dans ce cas, la surproduction ne cause pas d'effet significatif sur la diffusion de rendement en esclavage. De façon générale, ces résultats suggèrent que, sur le marché des obligations primaire des obligations, l'évaluation erronée de la vraie gestion de revenus existe encore, particulièrement pour les sociétés qui n'ont pas les plans d'options sur titres exécutifs.Dans le deuxième essai, j'ai étudié l'effet d'avoir accès à un conseil de qualité et de la protection de changement sur la vraie gestion de revenus. Quatre scénarios de vraie gestion de revenus sont considérés dans cette rédaction: la manipulation de ventes, la surproduction, la réduction anormale de R & D et la réduction anormale de dépenses discrétionnaires (autre que R&D). En utilisant des données de panneau des sociétés publiques établies dans la période du Sarbane
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Yu, Wei. "Accounting-based earnings management and real activities manipulation." Diss., Atlanta, Ga. : Georgia Institute of Technology, 2008. http://hdl.handle.net/1853/24686.
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Thesis (Ph.D.)--Management, Georgia Institute of Technology, 2008.Committee Chair: Church, Bryan; Committee Member: Comiskey, Eugene; Committee Member: Haizheng, Li; Committee Member: Kuang, Xi; Committee Member: Schneider, Arnold
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Dargenidou, Christina. "Accounting conservatism in expected earnings : a European study." Thesis, Bangor University, 2006. http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.432055.
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Wang, Dechun. "Founding family ownership and accounting earnings of quality /." free to MU campus, to others for purchase, 2004. http://wwwlib.umi.com/cr/mo/fullcit?p3144465.
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Wang, M. (Meng). "The impact of earnings management on accounting conservatism." Master's thesis, University of Oulu, 2012. http://jultika.oulu.fi/Record/nbnfioulu-201210081042.
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Abstract. This study attempts to explore and empirically examine the impact earnings management has on earnings conservatisms. I argue that in the practice of income-decreasing earning management, managers more likely accelerate the recognition of bad news in earnings than good news and it thus actually influences firms’ earnings conservatism by biasing the degree of firms’ earnings conservatism upwards. While in the practice of income-increasing earnings management, managers more likely speed up the recognition of good news in earnings while defer the recognition of bad news in earnings and it thus actually affects firms’ earnings conservatism by biasing the degree of firms’ earnings conservatism downwards. I also argue that the firms which engage in income-decreasing earnings management tend to be more conservative than the firms which engage in income-increasing earnings management.
In the empirical examination, I use the incremental bad news effect in Basu (1997) earnings regression model to measure the degree of earnings conservatism. Discretionary accruals is used to proxy for earnings management. I partition the full sample into income-decreasing sub sample and income-increasing sub sample according to the sign of firms’ discretionary accruals. The results show: (1) In Basu’s regression model, the negative discretionary accruals sub sample obtains the higher incremental coefficient on bad news than the full sample, while the negative discretionary accruals sub sample obtains the lower one than the full sample. (2) In the combined regression model, the estimated coefficient, which captures the incremental earnings’ response to bad news for the negative discretionary accruals sub sample firms, is significantly positive. The results therefore support my hypotheses.
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Keeney, Caroline. "Accounting for Earnings Management through Bad Debt Expense." Scholarship @ Claremont, 2019. https://scholarship.claremont.edu/cmc_theses/2063.
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This paper studied earnings management through Bad Debt Expense. The goal of this thesis was to see if managers manipulate Bad Debt Expense in order to smooth their bottom line. In order to test this, I created several different variables relating to Bad Debt Expense and some control variables for Net Income. I found that my results are consistent with earnings management. The results are not clearly stated and therefore I cannot say that earnings management is definitely happening, but it is a possibility.
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WANG, Lin Yuan. "Do firms’ earnings reported under IFRS 3R reveal more about future earnings and cash flows? Evidence from the European Union." Digital Commons @ Lingnan University, 2014. https://commons.ln.edu.hk/acct_etd/18.
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Motivated by recent studies documenting inconsistent results regarding the benefits of adopting International Financial Reporting Standards (IFRS), the objective of this thesis is to examine the information value of firms’ earning reported focusing on IFRS 3 (Business Combination). IFRS 3 aims at providing systematic guidelines for acquirers of a business combination transaction to properly report identifiable assets and liabilities, to fairly measure goodwill and to disclose relevant information for investors’ evaluation. IFRS 3 was revised and became effective in July 2009. Opponents of the revised IFRS 3 (IFRS 3R) criticized the guidelines to have broadened the disconnection between current earnings and future cash flows and they argued against the widened implementation of fair value measurement by IFRS 3. This thesis covers European Union’s mandatory adoption of IFRS in 2005 along with the revision of IFRS 3 in 2009. The examination period is split into two time periods: Period 1 is from the mandatory adoption of IFRS to the eve of policy change, and Period 2 is from the policy change to the end of 2013. Sample in this study comprises of 374 firms involved in merger and acquisition (M&A) transactions in both time periods which results in 13,464 firm-quarterly observations drawn from 20 out of 28 European Union member countries.
This study finds the association between current earnings and future earnings as well as future cash flows has been weakened since the adoption of IFRS 3R which implies the information value of current earnings has receded. In addition, quarterly earnings reported under IFRS 3 appear to be more volatile after controlling for factors influencing earnings volatility such as size, economic shocks and managers’ income smoothing behavior. Moreover, this study suggests that earnings volatility has a negative effect on earnings persistence over the whole testing period. In addition, such effect has amplified since the introduction of IFRS 3R. Following Mishkin’s (1983) method of testing market efficiency, this study supports that capital market impounds attenuated degree of earnings volatility effect on earnings predictability since the application of IFRS 3R. These results should draw the attention of both standard setters and public users as the convergence to IFRS from domestic GAAP has been a globally debating topic. Thus, standard setters should balance the benefits such as improved relevance, reliability and comparability of financial reports and costs such as the information loss of earnings when making IFRS adoption decisions. Meanwhile, public users should use the financial statements with caution, especially when M&A transaction involves.
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Nutt, Stacey R. "Systematic bias in financial accounting information contributing to the overestimation of future earnings : an investigation into a consequence of earnings management." Thesis, Georgia Institute of Technology, 1994. http://hdl.handle.net/1853/29388.
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柴麗萍 and Lai-ping Mary Chai. "Earnings management by late reporters." Thesis, The University of Hong Kong (Pokfulam, Hong Kong), 1999. http://hub.hku.hk/bib/B31238154.
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McCulloch, Brian William. "Earnings management with reversing accruals /." Thesis, Connect to this title online; UW restricted, 1997. http://hdl.handle.net/1773/8796.
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Basu, Atasi. "Reported earnings, auditor's opinion, and compensation Theory and evidence /." Related electronic resource: Current Research at SU : database of SU dissertations, recent titles available full text, 2005. http://wwwlib.umi.com/cr/syr/main.
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LI, Yongbo. "Tax-induced earnings management, auditor conservatism, and tax enforcement." Digital Commons @ Lingnan University, 2014. https://commons.ln.edu.hk/acct_etd/17.
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Prompted by the recent statutory corporate income tax-rate reduction in China, in this study I investigate whether the constraining effect that quality auditors have on tax-related discretionary current accruals (DCA) differs for two sub-groups of listed firms with tax incentives to manage earnings upward versus downward. I also explore whether the effectiveness of tax authority scrutiny (i.e. tax enforcement) on DCA differs for the same two groups.
I find that the firms’ two external monitors are sensitive to the direction of managerial incentives for earnings management. Specifically, higher-quality auditors are associated with smaller amounts of reported DCA and this association is stronger for firms with incentives to manage earnings upward and weaker for those with incentives to manage earnings downward, although the accrual decisions for all of the firms are driven by the same tax reporting incentives. The results are consistent with the notion that due to concerns with legal liability and reputation loss, auditors have incentives to ensure that firms report earnings conservatively. I also find a significantly positive association between tax enforcement and reported DCA for firms with incentives to manage earnings downward. This suggests that tax authorities constrain corporate accruals management that is likely to result in tax revenue loss. Taken together, my results suggest that a spillover effect exists between auditors and tax authorities, such that the two monitoring bodies compensate for each other’s lack of monitoring in one direction of accruals management. My results are robust to a set of sensitivity tests and have implications for academic researchers, policy makers, and capital market investors.
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Addeh, Rahma. "Book-tax differences and the persistence of accounting earnings." Thesis, University of Southampton, 2016. https://eprints.soton.ac.uk/402059/.
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This study aims to examine the relationship between Book-Tax Differences and earnings quality i.e. earnings persistence in order to assess the usefulness of accounting earnings for decision making. Managers may have incentives to increase accounting or “book” earnings while simultaneously reducing taxable income, any difference in the two measures is termed the book-tax difference (BTD). As the measurement of accounting earnings and taxable income is based on two different sets of rules differences can arise because of permissible discretion in the measurement of accounting income representing genuine economic differences. However, differences could also represent earnings management or manipulation, e.g. an increase in accounting income without a corresponding increase in real assets. Consequently this has raised calls to conform accounting earnings and taxable income in an attempt to limit the misuse of the discretion and the deviation permitted between the two measures. Nevertheless, conformity is argued to cause a loss of accounting earnings informativeness which makes them less useful for decision making. Using an earnings persistence model this study aims to address: (1) Does the contribution of the BTD in the model differ from that of underlying earnings and if so, does the nature of the contribution depend on a short term or longer-term measure of the BTDs. (2) Further, when BTDs are disaggregated into their “temporary” and “permanent” sources does the nature of the contribution change. If BTDs behave differently from underlying earnings, this will support the retention of differing measures of accounting earnings and taxable income and more directly retaining discretion in measurement of accounting earnings.
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Grambovas, Christos A. "Earnings properties and accounting valuation in the euro zone." Thesis, Bangor University, 2003. https://research.bangor.ac.uk/portal/en/theses/earnings-properties-and-accounting-valuation-in-the-euro-zone(cb0f5f37-aa5e-4e8f-9860-2341801c7846).html.
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Ling, Ran. "How Does the Nature of Accounting Standards Affect Audit Quality and Earnings Attributes?" FIU Digital Commons, 2018. https://digitalcommons.fiu.edu/etd/3764.
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The purpose of this study is to provide evidence on the effects of the nature of accounting standards (i.e. principles- versus rules-based accounting standards) on audit quality and earnings attributes. I construct a comprehensive instrument to effectively measure rules-based characteristics in the U.S. GAAP following Mergenthaler (2011). I then construct a firm-level instrument to capture firms' reliance on principles-based accounting standards using the textual analysis approach developed by Folsom et al. (2017). Using data from S&P 500 companies during 2009-2014, I first examine whether principles- (or rules-) based standards in the FASB Accounting Standards Codification (ASC) system affect both the inputs (i.e. audit fees) and the outcomes (i.e. financial misstatements) of the audit process. The multivariate regression results show that firms applying more principles-based standards pay less audit fees but the nature of accounting standards doesn’t affect restatements. My finding suggests that auditors do consider the degree of precision and complexity in accounting standards when assessing the level of audit inputs, but audit quality is generally not compromised by the nature of accounting standards. I also investigate the influence on firms’ earnings attributes. More specifically, I examine the statistical association between firms’ reliance on principles- (or rules-) based accounting standards and the timely loss recognition (TLR) during the same sample period. Interestingly, I find that the timeliness in loss recognition is insensitive to firms’ choice of applying more principles- (or rules-) based accounting standards. The results of this study should be of interest to preparers, auditors, U.S. standards setters, and accounting researchers.
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Salewski, Marcus. "Accounting quality under IFRS." Doctoral thesis, Saechsische Landesbibliothek- Staats- und Universitaetsbibliothek Dresden, 2014. http://nbn-resolving.de/urn:nbn:de:bsz:14-qucosa-135412.
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Since 2005, publicly traded European companies are required to prepare their consolidated financial statements in accordance with International Financial Reporting Standards (IFRS). This is the result of the so-called “IAS-Regulation” of the European Parliament and of the European Council (Regulation (EC) No. 1606/2002) which formulates two objectives directly related to financial reporting: (higher) comparability and transparency of financial statements. With regard to transparency, researchers often rely on proxies to measure the quality of financial statements. In this dissertation, I follow this approach and examine the quality of IFRS financial statements relying on different proxies, such as value relevance, the degree of earnings management, and disclosure quality. The four papers in this dissertation cover research questions related to the determinants and consequences of managerial discretion in the three most important components of financial statements: the balance sheet, the income statement, and the notes. In summary, this dissertation answers important questions concerning the quality of accounting under IFRS which have remained unanswered – and in some cases even unasked – until now. Therefore, this dissertation has a material impact on the understanding of accounting quality under IFRS.
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Cheng, Yun. "Managerial reputation and non-GAAP earnings disclosures." Thesis, Florida Atlantic University, 2015. http://pqdtopen.proquest.com/#viewpdf?dispub=3647568.
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I examine how managerial reputation affects the quality of non-GAAP earnings disclosures and how the market reacts to non-GAAP earnings disclosures associated with managerial reputation. Although there was an initial dip in the frequency of non-GAAP earnings disclosures after SOX and Regulation G, the frequency of non-GAAP earnings disclosures has increased in recent years (Brown, Christensen, Elliott and Mergenthaler 2012). Motivated by the efficient contracting theory and managerial reputation incentives, I investigate whether reputable managers are associated with higher quality non-GAAP earnings disclosures. I also investigate whether the market is more responsive to non-GAAP earnings disclosed by reputable managers. Using empirical models modified from prior research, I find that reputable managers are less likely to disclose non-GAAP earnings, which is consistent with the efficient contracting explanation. I also find that reputable managers exclude more recurring items that are related to future operating earnings when they disclose non-GAAP earnings, which is consistent with the rent extraction explanation in prior research. Finally, I find that managerial reputation has an incremental effect on the market reaction and that the market is more responsive to non-GAAP earnings disclosed by reputable managers if the unexpected earnings are positive. The study contributes to both non-GAAP earnings disclosures literature and managerial reputation incentives literature. It also has implications for investors, managers, and regulators.
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Pei, Chris M. "Earnings Management and Accounting Fraud: Examining the Necessity of Regulation." Scholarship @ Claremont, 2013. http://scholarship.claremont.edu/cmc_theses/777.
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Earnings management and accounting fraud are detrimental to the integrity of financial reporting, and more worryingly, are pervasive. Furthermore, there is often a grey area in which individuals regularly question whether or not specified accounting methods are strictly legal and permitted, or an underhanded abuse of GAAP-granted flexibility. In response, recently there has been an uprising of legislation attempting to curb the incidence of both these events, but there is still question as to whether or not these attempts are effective, or even wholly necessary. This piece examines methods of accounting manipulation through an analysis of cases, and then analyzes the effects on companies of attempts at both regulation and prevention.
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Brown, Darryl Lee. "The Persistence and Value Relevance of Earnings From Tax Savings." Diss., The University of Arizona, 2006. http://hdl.handle.net/10150/195331.
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This dissertation examines the persistence and value relevance of earnings attributable to tax savings and the extent to which this persistence and value relevance differs from those of nontax earnings. After controlling for factors previously shown to be systematically associated with the tax component of earnings, results show that tax savings are significant and statistically persistent but statistically less persistent than earnings from nontax sources. Results also reveal that the persistence of tax savings changes across tax regimes whereas earnings from nontax sources remain relatively unchanged. Contextual analysis shows that (1) the persistence of tax savings is largely driven by firms in the pharmaceutical, oil and gas, financial services, insurance and real estate industries, (2) the persistence of tax savings is increasing in the R&D tax credit and (3) this persistence is increasing in settings where the ratio of foreign over domestic earnings is increasing. Additionally, the persistence and value relevance of tax savings is increasing for positive tax savings, implying a market reward (penalty) for lower (higher) tax savings (reported effective tax rates). When I compare the results from my valuation tests with those from my persistence tests, I find that tax savings are sometimes not persistent but value relevant and sometimes persistent but not value relevant whereas the persistence and value relevance of nontax earnings are always consistent. These findings are consistent with managerial opportunistic behavior, a market that suspects managerial opportunistic behavior or a stock market that does not understand fully the persistence of tax savings relative to nontax savings. Results from the Mishkin (1983) test show that the market appears to significantly overestimate both the persistence of tax savings and nontax earnings, implying that securities are mispriced. This potential mispricing appears to be more severe for tax savings, implying that, on average, the market does not appear to understand fully the persistence and value relevance of the tax component of earnings. Finally, this study reconciles some of the mixed results of prior research and carries significant implications for policy makers, firm management, market participants and accounting researchers.
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Krull, Linda Kay. "An analysis of the relationship between the permanently reinvested earnings, repatriation taxes, and earnings management incentives of United States multinationals." Diss., The University of Arizona, 2001. http://hdl.handle.net/10150/289718.
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This paper investigates factors that influence the amount of foreign retained earnings permanently reinvested abroad and the market valuation of these earnings. I examine the effects of repatriation taxes and the difference between foreign and domestic profitability on the amount of foreign subsidiary earnings that firms reinvest abroad using the permanently reinvested earnings designation as a proxy for foreign retained earnings. This extends prior work that examines the effect of repatriation taxes on repatriations by including both foreign and domestic profitability and by allowing the effects to vary by the firm's foreign tax credit position. The results are consistent with the hypotheses and indicate that foreign retained earnings increase with the difference between foreign and domestic after-tax-returns. Foreign retained earnings decrease with the foreign tax rate for firms in binding foreign tax credit positions, but are not related to the foreign tax rate for firms in nonbinding foreign tax credit positions. Next, I examine how earnings management incentives affect the amount of foreign subsidiary earnings designated as permanently reinvested, controlling for the effects of profitability and repatriation taxes. I examine whether firms that are close to debt covenant violation or that fail to meet their target earnings have higher permanently reinvested earnings. The permanently reinvested earnings designation provides the opportunity to manage earnings because U.S. repatriation taxes need not be recognized in financial statement income if the earnings are designated as permanently reinvested. I find no evidence of earnings management to meet debt covenants; however, I do find evidence of earnings management to meet target earnings. Finally, I examine the market valuation of taxes on permanently reinvested earnings and whether this valuation differs for earnings managers and non-earnings managers. I hypothesize that because the tax estimate is undiscounted, the market values taxes on permanently reinvested earnings more negatively for earnings managers than for non-earnings managers because it perceives the investment to be of a shorter duration. The results support this hypothesis and suggest that the market recognizes earnings management attempts and values the tax estimate as if the reinvestment of foreign subsidiary earnings by earnings managers is not permanent.
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Jeppson, Nathan Hans. "Innovation Focused Strategy and Earnings Management." Kent State University / OhioLINK, 2013. http://rave.ohiolink.edu/etdc/view?acc_num=kent1363978241.
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Luippold, Benjamin Labrie. "Managing audits to manage earnings the impact of baiting tactics on an auditor's ability to uncover earnings management errors /." Amherst, Mass. : University of Massachusetts Amherst, 2009. http://scholarworks.umass.edu/open_access_dissertations/106/.
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Sneathen, Lowell Dwight. "Lack of timeliness, noise and transitory components in earnings as explanations for the apparent decline in the value relevance of earnings." Diss., The University of Arizona, 2001. http://hdl.handle.net/10150/280598.
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Prior studies identify three factors that contribute to the low contemporaneous association between returns (prices) and earnings: lack of timeliness of earnings capturing value relevant information, noise in earnings and transitory elements in earnings. This study seeks to identify whether these factors contribute to the observed inter-temporal decline in the contemporaneous association between returns (prices) and earnings documented in recent literature. Prior studies do not explicitly examine the affect of these factors on the inter-temporal decline, and the extant evidence is mixed. Empirical evidence presented here indicates that lack of timeliness of earnings and value irrelevant noise in earnings have increased over time, both contributing to the documented inter-temporal decline in the contemporaneous association between returns (prices) and earnings.
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Hällefors, Hans. "On the Relationship Between Accounting Earnings and Stock Returns : Model Development and Empirical Tests Based on Swedish Data." Licentiate thesis, Handelshögskolan i Stockholm, Institutionen för Redovisning och finansiering, 2013. http://urn.kb.se/resolve?urn=urn:nbn:se:hhs:diva-2086.
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Ren, JinJuan, and 任錦娟. "Investigating the role of accounting earnings in explaining increasingidiosyncratic volatility." Thesis, The University of Hong Kong (Pokfulam, Hong Kong), 2004. http://hub.hku.hk/bib/B29851051.
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Lyon, John Douglas. "The valuation information associated with the sequence of accounting earnings." Connect to resource, 1991. http://rave.ohiolink.edu/etdc/view.cgi?acc%5Fnum=osu1262708484.
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Taylor, Gary Kenneth. "Variance of earnings as a determinant of accounting method selection." Connect to resource, 1996. http://rave.ohiolink.edu/etdc/view.cgi?acc%5Fnum=osu1261312702.
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Lyon, John D. "The valuation information associated with the sequence of accounting earnings /." The Ohio State University, 1991. http://rave.ohiolink.edu/etdc/view?acc_num=osu1487688973682136.
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Shaikh, Sarah. "Managerial Career Concerns and Earnings Forecasts." Diss., The University of Arizona, 2015. http://hdl.handle.net/10150/556588.
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Using a novel setting, I examine the relation between a CEO's career concerns and the provision of an annual earnings forecast. Specifically, I exploit staggered changes in non-compete enforcement laws in three U.S. states as a source of exogenous variation in a CEO’s career concerns. Consistent with theory suggesting that career concerns increase a manager's aversion to risk, I find that a CEO is less likely to issue an earnings forecast in periods of stricter non-compete enforcement. Further, cross-sectional analyses indicate that the lower probability of forecast issuance is more pronounced for a CEO who has greater concern for his reputation, faces more risk in forecasting, and is more vulnerable to dismissal.
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Nichols, Nancy Brown. "Earnings Management and the Independence or Interdependence of Accounting Choices: the Decision to Adopt Mandated Accounting Changes." Thesis, University of North Texas, 1997. https://digital.library.unt.edu/ark:/67531/metadc277774/.
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This research examines whether firms managed earnings in the year they adopted SFAS 109, Accounting for Income Taxes (or its predecessor SFAS 96), by combining the choice to adopt SFAS 109 with other accounting choices in an interdependent rather than independent manner. Prior literature generally analyzes only one specific accounting choice, assuming that the decision is independent of other accounting procedure choices. However, it is unlikely that managers act in this manner. When attempting to achieve certain income goals, managers have numerous accounting tools available to them including the choice of accounting procedures and the exercise of judgment as to accrual amounts. This study investigates five choices consisting of: (1) the adoption of SFAS 109/96; (2) the adoption of SFAS 106; (3) the reporting of a restructuring of operations and/or a write-down of assets; (4) the reporting of asset sales; and (5) the choice of discretionary accruals.
The study adopts both a portfolio and joint decision approach. The portfolio approach combines the earnings effects of the five choices into a single dependent variable and tests income smoothing, big bath, and debt hypotheses. The joint decision approach utilizes simultaneous equation methodology to investigate the interdependence of the five choices and the independent variables.
The portfolio approach findings provide evidence that firms used the combined effect of the five accounting choices to smooth income in the year they adopted FAS 109/96. The results also provide support for the debt hypothesis but do not support the big bath hypothesis. The joint decision approach findings provide evidence that firms jointly determined at least two of the five accounting choices. The strong support for the income smoothing hypothesis under the portfolio approach combined with the joint significance of the individual accounting choices in the simultaneous equations suggests that firms use a multitude of accounting choices to manage earnings and that some of those decisions are made jointly, not independently.
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Budrina, M. (Maria). "The impact of IFRS adoption on accrual-based earnings management:evidence from Russia." Master's thesis, University of Oulu, 2014. http://urn.fi/URN:NBN:fi:oulu-201405211443.
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This paper examines the impact of the IFRS adoption on earnings management and earnings quality in Russia. Despite the fact that multiple surveys and papers focus on earnings quality, earnings management and IFRS research, these topics are still actively being studied. This research is motivated by the increase of attention to the IFRS implementation process in Russia. The process of harmonization of Russian Accounting Standards with IFRS takes long time as there are significant differences between these two standards. The reasons for that are Russian economic and political issues.
Existing academic research shows controversial results concerning the impact of the IFRS adoption on earnings quality. Some research provides evidence that the IFRS adoption brings significant benefits to a country as it improves disclosure quality and informational environment around the IFRS adoption. However, several studies argue, that, at the same time, IFRS give significant flexibility and discretion to managers. This does not always mean the improvement of disclosure quality. In this paper we provide one more examination of how IFRS influences earnings quality.
This thesis studies the accrual-based type of earnings management. The empirical analysis employs the linear regression model which includes a dependent variable (discretionary accruals) and several control variables. The Jones model is used for the estimation of discretionary accruals as a measure of earnings management. The sample used for the analysis contains 577 observations of Russian companies from various industries during the period 2006–2012.
This research proves that IFRS adoption increases accruals-based earnings management which leads to lower earnings quality in Russian companies. The results of the empirical research support the hypothesis that a positive correlation exists between IFRS adoption and earnings management. The results show that Russian companies use downward earnings management (income minimization) mostly. Finally, this paper demonstrates that IFRS do not always have a positive impact on the quality of accounting information. The adoption of IFRS in Russia is close to the final steps, but it is still not clear if it brings real benefits to the Russian business environment.
The limitations of this study are the usage of the Jones model instead of the Modified Jones model and the relevancy of data set.
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Qiang, X. (Xiaomin). "Earnings management in small profit firms during financial crisis of 2008–2009." Master's thesis, University of Oulu, 2013. http://urn.fi/URN:NBN:fi:oulu-201304051161.
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Purpose: This paper examines empirically the managerial earnings management practices undertaken by small profits firms, and seeks whether these practices changed during the recent global financial crisis. Previous studies on small but positive earnings are normally in whether earnings management causes the discontinuity around zero in earnings distribution. There few studies combined discontinuity around zero with different macroeconomic conditions.
Design: The association between earnings management and small profit firms is investigated by three measures. First, earnings distribution of scaled earnings by lagged market value in different scaled earnings level during financial crisis is portrayed. Second, distribution of accumulated discretionary accruals which is the proxy for earnings management in different scaled earnings level is exhibited. Third, based on the qualified firm-year observations, discretionary accruals regressed on several earnings management controlling variables are tested. Due to the limited number of qualified firm-year observations, two measures of small profit firms are used.
Data: The sample is selected from all listed firms in United States. Financial crisis period is confined in Year 2008 and 2009 when the stock price was in the bottom in recent decades. In these two years, the incentives from capital markets are restricted in the low level.
Findings: Without considering financial crisis, there is income-increasing earnings management in small profit firms which is consistent with previous studies. After considering financial crisis, the practices of earnings management is changed to income-decreasing, which provides the direct evidence on that the constitution of small profits firms are those ex-ante profit firms during the crisis and also provides the indirect evidence on that the constitution of small profits firms are small losses or losses firms in other periods. Both earnings distribution and accumulated discretionary accruals in financial crisis have the same consequence.
Practical Implications: This paper shows profit firms employ income-decreasing earnings management during the bad economic situation. The good financial performance from these firms in the post-crisis period need to be questioned whether the business actually revived.
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Green, Brendan Richard. "Pursuing shareholder value : comparing the information content of EVA and accounting earnings." Master's thesis, University of Cape Town, 2000. http://hdl.handle.net/11427/5633.
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Bibliography: leaves 82-85.This study provides independent empirical evidence of the strength of the relationship between changes in shareholder value and various financial measures of corporate performance. The objective is to assess whether adopting the goal of maximising EV A, instead of accounting earnings, enables management to more effectively pursue shareholder value. Firstly, the ability of EVA and accounting earnings to explain contemporaneous annual share returns is assessed. This relative information content issue is tested on a sample of 758 company year-ends from 1991 to 1997. Results indicate that accounting earnings explains 26% of the variation in cumulative abnormal returns. The comparative figure for EVA is less than 12%. This suggests that accounting earnings tends to dominate EV A in its association with share returns.
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Smith, Pamela Ann 1959. "The Early Adoption of Accounting Standards as an Earnings Management Tool." Thesis, University of North Texas, 1993. https://digital.library.unt.edu/ark:/67531/metadc278742/.
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Many corporate managers elect to adopt a new Statement of Financial Accounting Standard (SFAS) early instead of waiting until the mandatory adoption date. This study tests for evidence that managers use early adoption as an earnings management tool in a manner consistent with one or more positive accounting theories.
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Wakil, Gulraze. "Conservatism, Earnings Persistence, and the Accruals Anomaly." Kent State University / OhioLINK, 2011. http://rave.ohiolink.edu/etdc/view?acc_num=kent1301329397.
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Woodland, Angela M. "The effects of tracking stock issuances on operating performance, shareholder wealth, and the informativeness of accounting fundamentals /." free to MU campus, to others for purchase, 2001. http://wwwlib.umi.com/cr/mo/fullcit?p3025667.
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LAM, Mo. "Ethical climate, the perceived importance of ethics and social responsibility, and earnings management." Digital Commons @ Lingnan University, 2012. https://commons.ln.edu.hk/acct_etd/14.
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The practice of earnings management not only adversely affects the long-term economic prospects of a particular business enterprise by eroding public confidence in the company, but also may severely undermine the reputation of Hong Kong as an international financial and trading centre. Given the devastating effects of such practices resulting from corporate scandals such as Enron and WorldCom, earnings management has received unprecedented attention in the past decade. The incommensurability between the far-reaching effects of ethical issues relating to earnings management and the paucity of prior research on the subject in Hong Kong triggers my interest to study this topic.
The study examines the influence of organizational ethical climate and the perceived importance of corporate ethics and social responsibility on practicing accountants’ ethical decisions regarding accounting and operating earnings management. Structural equation modeling (SEM) is used to test the hypotheses. Based on 206 survey responses from practicing accountants, the models for both accounting and operating earnings management provide general support for the hypotheses. The results indicate that participants’ perceptions of the ethical climate in their organization influence their attitudes toward the perceived importance of corporate ethics and social responsibility, which in turn influence ethical decisions (judgments and intentions) regarding earnings management.