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1
Wan, Huishan. "An Empirical Assessment of Alternative Discretionary Accrual Models: Evidence from Earnings Restatements." Accounting and Finance Research 7, no. 4 (2018): 138. http://dx.doi.org/10.5430/afr.v7n4p138.
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Using a sample of firms that restated earnings, this study seeks to evaluate the performance of alternative discretionary accrual models along two dimensions: earnings management detection and accuracy (the ability to accurately estimate the magnitude of managed earnings). The findings of this study are important for three reasons. First, discretionary accrual models play a prominent role in several streams of accounting research, especially in earnings management research. Thus, the ability of discretionary accrual models to isolate the discretionary component from the non-discretionary component of total accruals is critical. Second, there is concern about earnings management inferences drawn from discretionary accrual estimates generated by existing discretionary accrual models. One major concern is that extant discretionary accrual models are mis-specified, which results in misleading inferences about earnings management behavior. Finally, there is lack of consensus in the literature on the relative performance of discretionary accrual models. Using earnings restatements data, I investigate the relative performance of four extant discretionary accrual models and a Modified Forward-Looking Model. The findings indicate that the Modified Forward-Looking Model is better specified and outperforms the other models both in terms of detecting earnings management and in estimating the magnitude of managed earnings.
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Krishnan, Gopal V. "Audit Quality and the Pricing of Discretionary Accruals." AUDITING: A Journal of Practice & Theory 22, no. 1 (2003): 109–26. http://dx.doi.org/10.2308/aud.2003.22.1.109.
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Accrual-based earnings is considered superior to cash flows. Accruals allow managers to communicate their private and inside information and thereby improve the ability of earnings to reflect underlying economic value. However, managers could engage in aggressive reporting of accruals that would seriously undermine the informativeness of reported earnings. Since outsiders cannot directly observe earnings, high-accrual firms face greater agency costs relative to low-accrual firms. Auditing plays an important role in mitigating these agency costs by constraining opportunistic management of accruals. This study examines whether there is a linkage between audit quality and pricing of discretionary accruals. The findings indicate that the association between stock returns and discretionary accruals is greater for firms audited by Big 6 auditors than for firms audited by non-Big 6 auditors. Further, discretionary accruals of clients of Big 6 auditors have a greater association with future profitability than discretionary accruals of clients of non-Big 6 auditors.
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Kencana, Dwi Tirta. "PENGARUH MANAJEMEN LABA TERHADAP RETURN SAHAM DENGAN VARIABEL KONTROL RETURN ON EQUITY PADA PERUSAHAAN MANUFAKTUR DALAM BURSA EFEK INDONESIA." TECHNOBIZ : International Journal of Business 4, no. 2 (2021): 74. http://dx.doi.org/10.33365/tb.v4i2.1390.
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AbstrakTeori keagenan menyatakan bahwa masing-masing individu semata-mata termotivasi oleh kepentingan sendiri sehingga menimbulkan konflik kepentingan antara principal dan agent. Standar Akuntansi yang dikeluarkan oleh Ikatan Akuntansi Indonesia (IAI) memperbolehkan pihak manajemen melakukan kebijakan sendiri dalam menggunakan metode akuntansi dalam perusahaannya. Kewenangan tersebut memberi peluang bagi pihak manajemen untuk melakukan tindakan manajemen laba. Discretionary accrual dan non discretionary accrual merupakan proksi dari tindakan manajemen laba. Keberadaan informasi laba dan arus kas dipandang oleh pemakai informasi sebagai hal yang saling melengkapi guna mengevaluasi kinerja perusahaan. Informasi arus kas dan laba memiliki kandungan informasi jika pada saat diumumkan ada reaksi pasar. Reaksi pasar ditunjukkan adanya perubahan harga sekuritas yang diukur dengan return saham. Tujuan dari penelitian ini adalah untuk memberikan bukti empiris ada atau tidaknya pengaruh discretionary accrual, non discretionary accrual, operating cash flow terhadap return saham. Data yang digunakan adalah data sekunder yang berasal dari laporan keuangan perusahaan. Jumlah sampel sebanyak 45 perusahaan manufaktur yang terdaftar dalam Bursa Efek Indonesia periode 2010-2014. Metode analisis yang digunakan dalam penelitian ini adalah analisis regresi linier berganda dengan alat analisis SPSS versi 20.Hasil dari penelitian ini adalah discretionary accrual, non discretionary accrual, dan operating cash flow tidak berpengaruh pada return saham.Kata Kunci: Manajemen Laba, Discretionary Accrual, Non Discretionary Accrual, Operating Cash Flow, Return Saham, dan Return on Equity
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Kliestik, Tomas, Lenka Hrosova, Katarina Valaskova, and Lucia Svabova. "Do Firm in the Tourism Sector Manage Earnings? The Case of the V4 Countries." Journal of Tourism and Services 13, no. 25 (2022): 120–36. http://dx.doi.org/10.29036/jots.v13i25.376.
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We study whether the presence of earnings management in the period of 2016-2019 occurs in companies operating in the tourism sector in the V4 countries, as the issue of earnings management in the tourism sector is not developed in these countries. To identify the presence of earnings management, we apply the Jones model in each V4 country to assess the occurrence of earnings management and its direction, degree, and extent. We use regression analysis in our paper. The existence of earnings management is verified using a non-parametric Mann-Whitney test. The direction, degree, and extent are verified through discretionary accrual percentages and average discretionary accruals. The data are drawn from the Amadeus financial database. The selection of companies is based on a set criterion, where the value of total assets in the period 2016-2019 will reach at least one million euros. Our analysis shows that companies in the tourism sector in the V4 countries manipulate profits. Discretionary accrual analysis reveals different positive and negative discretionary accrual values in the V4 countries. Enterprises in Slovakia achieve lower values of positive discretionary accrual compared to negative discretionary accrual. On the contrary, in the Czech Republic, Poland, and Hungary, companies achieve higher values of positive discretionary accrual. We also found that companies in Slovakia manage their profits by decreasing compared to those in the Czech Republic, Poland, and Hungary, which in turn manage their profits by increasing.
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Baber, William R., Sok-Hyon Kang, and Ying Li. "Modeling Discretionary Accrual Reversal and the Balance Sheet as an Earnings Management Constraint." Accounting Review 86, no. 4 (2011): 1189–212. http://dx.doi.org/10.2308/accr-10037.
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ABSTRACT This study presents conceptual and empirical analyses of discretionary accrual reversal in the earnings management context. We specifically focus on the extent that income-increasing (decreasing) discretionary accruals initiated in a prior period reverse to become income-decreasing (increasing) accruals in the current period. The analysis suggests that the extent that such reversals constrain the ability to manage toward earnings objectives depends on both the magnitude of past accrual-based earnings management and the reversal speed of past discretionary accruals. To demonstrate the empirical implications of the analysis, we consider discretionary accrual reversal speed as an additional determinant of the balance sheet constraint on earnings management (Barton and Simko 2002). We show that, conditional on the magnitude of net operating asset overstatement, the probability of achieving quarterly earnings forecasts varies inversely with reversal speed.
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Linck, James S., Jeffry Netter, and Tao Shu. "Can Managers Use Discretionary Accruals to Ease Financial Constraints? Evidence from Discretionary Accruals Prior to Investment." Accounting Review 88, no. 6 (2013): 2117–43. http://dx.doi.org/10.2308/accr-50537.
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ABSTRACT: Despite a large literature on discretionary accruals, how the use of discretionary accruals impacts corporate financial decisions is not well understood. We hypothesize that a financially constrained firm with valuable projects can use discretionary accruals to credibly signal positive prospects, enabling it to raise capital to make the investments. We examine a large panel of firms during 1987 to 2009 and find that financially constrained firms with good investment opportunities have significantly higher discretionary accruals prior to investment compared to their unconstrained counterparts. Constrained high-accrual firms have higher earnings-announcement returns than constrained low-accrual firms, obtain more equity and debt financing, and invest in projects that appear to improve performance. These results provide supporting evidence that the use of discretionary accruals can help constrained firms with valuable projects ease those constraints and increase firm value. Data Availability: Data are available from public sources indicated in the text.
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Nugroho, Yoga Pratama, Doddy Setiawan, and Linda Kusumaning Wedari. "The role of the audit committee in accounting and finance expertise on earnings quality." Corporate Governance and Organizational Behavior Review 6, no. 2 (2022): 41–51. http://dx.doi.org/10.22495/cgobrv6i2p4.
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This study aims at examining the effect of the audit committee with accounting and finance expertise on the earnings quality of manufacturing companies in Indonesia. The earnings quality measurement uses the absolute value of discretionary accrual. This study uses three measurements of discretionary accruals, the Jones model (Jones, 1991), the modified Jones (Dechow, Sloan, & Sweeney, 1995), and the Kasznik models (Kasznik, 1999). Further, the current study refers to Badolato, Donelson, and Ege (2014) to identify the audit committee expertise. The data were collected from the Indonesia Stock Exchange (IDX) between 2015 and 2017 with 331 observations. The results showed that audit committees’ characteristics with both accounting and finance expertise have a negative effect on discretionary accrual. Thus, audit committees’ members with both accounting and finance expertise have reduced the level of discretionary accruals. The result is consistent using three measurements of discretionary accruals. Therefore, the audit committee members with both accounting and finance expertise have a positive effect on improving the quality of firms’ earnings. Our result is robust to different methods of discretionary accrual measurement. This study may be very helpful for those audit committees seeking to improve their composition and way of working. In other words, the findings of this study are potentially relevant to both audit committees and policy-makers
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Lim, Seung-Yeon. "Consolidated Financial Statements, Industry Classification, and Discretionary Accruals." Dongguk Business Research Institute 47, no. 1 (2025): 1–20. https://doi.org/10.55685/bcr.2025.47.1.1.
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This study analyzes the effect of the difference between consolidated and separate financial statement revenue on the appropriateness of discretionary accruals, focusing on Korean listed companies for which the consolidated financial statement became the primary financial statement following the adoption of K-IFRS. Discretionary accruals are typically estimated using accrual models by industry and year. A large revenue discrepancy between consolidated and separate financial statements may indicate that the performance of subsidiaries in various industries could influence the estimation of discretionary accruals. In this study, we assess the appropriateness of discretionary accruals by examining whether they meet statistical assumptions, specifically that the residuals from the accrual model’s regression have an expected value of zero and no serial correlation. The analysis reveals that, across the full sample, the expected value of discretionary accruals was zero, but significant serial correlation was present. However, when dividing the sample into quintiles based on the revenue discrepancy between consolidated and separate financial statements, we found that for firms with no revenue discrepancy, discretionary accruals had an expected value of zero and showed no serial correlation. Conversely, for firms with the largest revenue discrepancy, while the expected value of discretionary accruals remained zero, the serial correlation was highest and statistically significant. These findings suggest that when estimating discretionary accruals by industry, it is important to first examine whether the classification and impact of industries are accurately reflected in the consolidated financial statements that companies report.
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Okabrian, Soni, Afifa Nurhanifah, Kamaluddin Rahmat, and Venni Avionita. "The Accrual Quality and Governance on Stock Return." Jurnal Akuntansi & Keuangan Unja 8, no. 1 (2023): 35–41. http://dx.doi.org/10.22437/jaku.v8i1.27200.
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This study aims to determine the effect of accrual quality through discretionary accruals and governance through institutional ownership, independent commissioners, audit committees and directors on Stock Returns. The study used data from 39 companies included in the Kompas 100 index from 2019 to 2021. The results showed that there was a significant effect on accruals and independent commissioners' discretionary variables on Stock Returns, while for institutional ownership, audit committee and advisory variables had no effect on Stock Returns. . Discretionary accruals have a negative effect on Stock Returns, while independent commissioners have a positive effect on Stock Returns. Taken together discretionary accruals, institutional ownership, independent commissioners, audit committees and directors influence Stock Returns by 14.5%.
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Burdeos, Angelo O. "Earnings management, corporate governance, and ownership structure of Philippine initial public offerings." Corporate Ownership and Control 18, no. 4 (2021): 175–91. http://dx.doi.org/10.22495/cocv18i4art12.
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Prior studies examined the effect of corporate governance variables on discretionary current accrual, the most widely used measurement of earnings management. The principal-agent conflict implies that the size of the board, the percent of independent directors, CEO duality, and auditor prestige limit discretionary current accruals (DCA). This paper extends past studies by examining the effect of ownership structure on discretionary current accruals. The study determines the level of income-increasing earnings management of initial public offerings (IPOs) in the Philippines and the factors that explain it. Particularly, the paper examines the effect of ownership concentration and largest shareholder ownership on discretionary current accruals. The study uses a final sample of 105 IPO firms in Philippine Stock Exchange (PSE) from 2008 to 2018. Employing the modified Jones’s (1991) model to measure discretionary current accrual and multiple regression analysis, the study finds -4.19% discretionary current accrual on the average. It also reveals that the 2002 Philippine Code of Corporate Governance (PCCG) is ineffective in curbing earnings management. In addition, there is an insignificant relationship between the size of the board, CEO duality, ownership concentration, largest shareholder ownership and auditor prestige, and earnings management. Furthermore, the paper finds a significant relationship between the percent of independent directors, industry sector, return on assets (ROA) and cash flow from operations and earnings management.
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Vichitsarawong, Thanyaluk, and Li Li Eng. "Financial Crisis and Earnings Management Under U.S. GAAP and IFRS." Review of Pacific Basin Financial Markets and Policies 23, no. 02 (2020): 2050015. http://dx.doi.org/10.1142/s0219091520500150.
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This paper examines the effects of the global financial crisis of 2008 on real and accrual-based earnings management activities of foreign companies listed in the United States as American Depositary Receipts (ADRs). The ADR firms are classified according to whether they report under U.S. Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS). Accrual-based earnings management is measured using the absolute value of performance-matched discretionary accruals. We also use the positive and negative values of performance-matched discretionary accruals to examine income-increasing and income-decreasing earnings management, respectively. Real earnings management proxies are measured using performance-matched measures of the abnormal levels of cash flow from operations, production costs, and discretionary expenses. In summary, our findings indicate no difference in accrual-based earnings management for ADRs reporting under IFRS and U.S. GAAP but suggest that ADRs reporting under IFRS are more likely to manage earnings using income-decreasing discretionary accruals and aggregate real earnings management than ADRs reporting under U.S. GAAP during the financial crisis.
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Toru, Woyengibuomo, and Stanley OGOUN. "CEO Shareholding and Discretionary Accruals of Firms Listed in Non-Financial firms in Nigeria." Saudi Journal of Business and Management Studies 9, no. 09 (2024): 218–26. http://dx.doi.org/10.36348/sjbms.2024.v09i09.004.
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This study investigated the impact of CEO Shareholding on discretionary accrual of listed firms on the floor of the Nigerian Stock Exchange. The study used the ex-post facto research design. This informed the reliance on secondary data obtained from the published annual reports and accounts of a sample of eighty-six (86) non-finance companies and the sample size was determined via the Taro Yamane Formula. The study employed judgmental sampling technique based on certain criteria. The study employed CEO Shareholding (independent variables) while discretionary accruals via the Modified Jones Model. (Dependent variable) Both descriptive and inferential statistics were employed in the analysis of data. The major findings derived from this study CEO Shareholding insignificantly affect discretionary accrual. The study recommends that share-based option of executive compensation given to top business executives be encouraged as this has the tendency of increasing organizational productivity, efficiency and help reduce dysfunctional behavior among chief executive officers since their investments are also as stake, hence there will be goal congruence and the resultant effect reducing dysfunctional behavior. In addition, this study contributes to knowledge by providing empirical evidence that CEO Shareholding are not prime instigator of discretionary accrual in non –financial sector of Nigeria listed companies and the developed model can be used by researchers in both developed and developing countries.
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Samoei, Ben Kipngetich, Kimwolo Andrew, and Tenai Joel. "Financing Cash Flow, Discretionary Accruals and Stock Return of Firms Listed in Nairobi Securities Exchange, Kenya." Journal of Economics, Finance And Management Studies 4, no. 12 (2021): 2471–81. https://doi.org/10.47191/jefms/v4-i12-08.
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The purpose of the study was to establish the effect of financing cash flow on stock return and to test the moderating effect of discretionary accruals on the relationship between financing cash flow and stock return. Panel data was collected from 29 listed non-financial firms at NSE for 12 years from 2007-2019. Fixed effect hierarchical regression analysis showed that financing cash flow had a positive and significant effect on stock return while discretionary accruals negatively moderate the relationship between financing cash flows and stock returns. The study concludes that financing cash flow improves stock return, however, high discretionary accruals adversely reduce the effect of financing cash flow on stock return. Therefore, the study recommends that NSE should enact incisive regulations pertaining to discretionary accrual practices and its implication on stock return to protect investor vulnerability to losses in their investment due to managers’ opportunistic behaviours.
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Rohman, Abdul, Iwan Efriandy, and Nur Khamisah. "IMPLEMENTATION OF ACCRUAL POLICY, INTERNAL CONTROL SYSTEM AND PUBLIC SERVICE INDEX IN CONTROLLING GOVERNMENT FINANCIAL MANAGEMENT." Jemasi: Jurnal Ekonomi Manajemen dan Akuntansi 20, no. 1 (2024): 64–75. http://dx.doi.org/10.35449/jemasi.v20i1.747.
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The development of the application of accrual accounting has become a global trend but is still not fully embraced by the Indonesian government. The implementation of accrual accounting in government raises many problems. This research is quantitative using the influence test method. The population is the Indonesian government and the sample uses Indonesian regional governments. The aim of this research is to examine whether accrual policies and the maturity of the internal control system and public service index can influence the efficiency of regional government financial control. The results of this research indicate that partially the discretionary accrual variables, both the Jones model approach and the modified Jones model approach, have an effect on the efficiency of local government financial management. Apart from that, the public service index variable also influences the efficiency of local government financial management. Meanwhile, the internal control system maturity variable has no effect on the efficiency of regional government financial control. Simultaneously, the variable discretionary accruals of the Jones model, discretionary accruals of the modified model, and the maturity of the government's internal control system influence the efficiency of financial management. So, to increase the efficiency of financial management, local governments can increase the application of discretionary accruals and pay attention to public services.
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Jaggi, Bikki, and Picheng Lee. "Earnings Management Response to Debt Covenant Violations and Debt Restructuring." Journal of Accounting, Auditing & Finance 17, no. 4 (2002): 295–324. http://dx.doi.org/10.1177/0148558x0201700402.
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The study investigates whether the choice of income-increasing or income-decreasing discretionary accruals is related to the severity of financial distress and whether this choice is also influenced by the creditors' waivers of debt covenant violations. Financially distressed firms experiencing debt covenant violations and/or debt restructuring during the 1989–96 period are used to evaluate the management's choice of discretionary accruals. Discretionary accruals are calculated based on four different accrual models. The results show that managers of financial distressed firms use income-increasing discretionary accruals if they are able to obtain waivers for debt covenant violations, and use income-decreasing discretionary accruals if debt restructuring takes place or debts are renegotiated because waivers are denied. These findings thus provide support to the expectation that the choice of income-increasing or -decreasing discretionary accruals is influenced by the severity of financial distress. They also provide an explanation for divergence in the results of earlier studies on the use of income-increasing or -decreasing discretionary accruals by financially distressed firms.
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Shamsul Nahar Abdullah. "Earnings Management in Small Listed Firms in Malaysia Using Quantile Regression." International Journal of Business and Society 23, no. 1 (2022): 326–41. http://dx.doi.org/10.33736/ijbs.4615.2022.
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This study examines the role of board independence and audit committee expertise in accounting on earnings management in small listed firms in Malaysia, which have been neglected in corporate governance research. Due to their small size, the listing requirements imposed on them by Bursa Malaysia are less stringent. Hence, these firms are predicted to have a higher tendency to manage earnings compared to large listed firms. All firms listed on the Bursa Malaysia ACE Market during the financial years 2012 to 2014 inclusive were selected. The data were analysed using quantile regression to enable the determination of the effects of the corporate governance variables across the quantiles in the conditional distribution of discretionary accruals. The results show that small listed firms have a very high propensity for accrual management compared to large listed firms. The study also reveals that board independence is not associated with either the incidence of accrual management or the direction of discretionary accruals. It also shows that audit committee expertise can mitigate the propensity for discretionary accruals and if discretionary accruals are present, the objective was to reduce the firm’s earnings. However, this evidence only holds in firms where the utilization of discretionary accruals is pervasive.
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Sutrisno, Paulina. "Earnings Management: An Advantage or Disadvantage?" Accounting and Finance Review (AFR) Vol.2(2) Apr-Jun 2017 2, no. 2 (2017): 64–72. http://dx.doi.org/10.35609/afr.2017.2.2(9).
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Objective - The purpose of this research is to examine the consequences of accrual based earnings management and real earnings management on future operating performance.The firms studied engage in accrual-based earnings management with discretionary accrual measures using the modified Jones model and some of the following real earnings management activities: (1) Sales manipulation that accelerates the timing of sales through increased price discounts or cutting prices to boost sales in the current period; and/or (2) cutting of discretionary expenditures to increase income in the current period. Furthermore, the study examines the extent to which discretionary accrual and real earnings management affects subsequent operating performance (as measured by both return on assets and operating cash flows). Methodology/Technique - The sample manufacturing firms that engage in financial statement were listed on the Indonesian Stock Exchange between 2012 and 2014. The hypothesis testing method used in this research is multiple regression linear. Findings - The results suggest that accrual-based earnings management, with discretionary accrual measures, and real earnings management through sales manipulation and discretionary expenditures are positively associated with return on assets after one and two years. Meanwhile, accrual-based earnings management and real earnings management through sales manipulation enhances subsequent operating cash flows. However, real earnings management through discretionary expenditures does not influence operating cash flows. Novelty - This research contributes to the existing literature on the subsequent impact of accrual-based earnings management and real earnings management Type of Paper: Empirical Keywords: Discretionary Accrual; Sales Manipulation; Discretionary Expenditure; Return on Assets; Operating Cash Flows JEL Classification: M21, M41.
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Widianingsih, Yuni Pristiwati Noer, Doddy Setiawan, Y. Anni Aryani, and Evi Gantyowati. "Accrual Management and Firm-Specific Risk." International Journal of Financial Studies 10, no. 4 (2022): 111. http://dx.doi.org/10.3390/ijfs10040111.
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Firm-specific risk causes opinion differences on whether it relates to price informativeness or errors. The main difference is related to the disparity in information transparency. Therefore, this study tests the relationship between accrual management and firm-specific risk based on information transparency. It was conducted on firms listed on the Indonesia Stock Exchange from 2015 to 2019. The results showed that accrual management positively affects specific risks, which is strengthened by information asymmetry. These results indicate that accrual management has the potential to occur in environments with low transparency or high information asymmetry. Accrual management inhibits actual information, causing errors in stock price assessments that indicate firm-specific risk. This proves that firm-specific risk shows a price error. These results are consistent with previous studies that discretionary accruals can measure earnings quality by considering the firm’s fundamental factors reflected in how non-discretionary accruals affect firm-specific risk. This study shows that risk fluctuates depending on firm-specific information.
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Surifah. "The effect of the type of controlling shareholders and corporate governance on real and accruals earnings management." Corporate Ownership and Control 13, no. 1 (2015): 917–35. http://dx.doi.org/10.22495/cocv13i1c8p10.
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This research investigates the relationship between corporate governance and preference of earnings management selected by Indonesian banking controlling shareholders. This study uses all banks listed on Indonesian Stock Exchange from 2006 until 2011 as samples. The result shows higher real earning managements and lower accruals discretionary in family-controlled banks and private institution compared to government-controlled banks. Government-controlled banks prefer accrual-based earnings management and real activity-based earnings management through operating cash flow. In the other hand, family-controlled banks and private institutions prefer real earnings management through interest expense and discretionary expenses. Foreign-controlled- banks choose earnings management through discretionary expenses. The implementation of corporate governance in Indonesia banking is high and giving negative impacts both to accrual and real-based earnings management. Concentrated ownership gives positive influences toward the accrual earning management and real earning management through discretionary expenses. The bank size has a positive and significant influence on accrual earnings management, yet its effect is negative and significant on real earning management through interest expenses. The findings contribute to the development of financial accounting literatures because there are small numbers of previous research on accrual discretionary on family-owned companies. Company does not indicate the increase of earnings quality, but it is indeed indicating that controlling family pays more attention on choosing the real activity-based earnings management to cover the expropriation. Accrual discretionary-based earnings management is intra-period reversely thus it cannot cover the permanent expropriation of controlling owners. The research also contributes to the studies of real-based earnings management measurement in banking system which has not been become a concern of research on previous studies.
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Masiku, Ravaela Amba, and Christine Novita Dewi. "UKURAN KANTOR AKUNTAN PUBLIK, DISCRETIONARY ACCRUALS DAN OPINI AUDIT GOING CONCERN." Jurnal Riset Akuntansi dan Keuangan 15, no. 1 (2019): 11. http://dx.doi.org/10.21460/jrak.2019.151.320.
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The purpose of this study is to examine auditor’s concervatism in term of their reaction to client’s earnings management behavior and their limitations to issue the going concern opinions (GCO). The population of this study consists of 672 observations from 69 companies are listed on the Indonesia Stock Exchange (BEI) during 2012-2017. The author used the modified Jones model to measure discretionary accruals as a proxy of earnings management. The results of this study indicate that size of audit firm has a positive effect to discretionary accrual. Companies that have been audited by the Big4 tend to apply discretionary accrual in their financial reporting than companies audited by Non-Big4. Further, to strenghten the first hypothesis, we examine the effect of discretionary accruals and going concern opinion on companies that audited by audit firms Big4 lower than companies that audited by audit firms Non-Big4. We found that the result is consistent with the first hypothesis. Keywords : auditor reputation, discretionary accruals, going concern opinion, audit firm ABSTRAK Tujuan dari penelitian ini adalah untuk menguji konservatisme auditor dalam hal reaksi auditor terhadap akrual diskresioner yang dilakukan oleh perusahaan dan keterbatasan auditor untuk menerbitkan opini Going Concern (GC). Populasi penelitian terdiri dari 672 pengamatan dari 69 perusahaan yang terdaftar di Bursa Efek Indonesia (BEI) selama tahun 2012-2017. Penulis menggunakan model modifikasi Jones untuk mengukur akrual diskresioner sebagai proksi manajemen laba. Hasil dari penelitian ini menjelaskan bahwa ukuran kantor akuntan publik berpengaruh positif terhadap akrual diskresioner, hal tersebut diperkuat dengan pengaruh akrual diskresioner dan opini audit going concern yang diaudit oleh kantor akuntan publik Big4 lebih rendah dari perusahaan yang tidak diaudit oleh kantor akuntan publik Non-Big4. Kata kunci : reputasi auditor, akrual diskresioner, opini audit going concern, kantor akuntan publik
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Martias, Andi. "ANALISA PENGARUH FREE CASH FLOW, AUDIT INTERNAL, LIKUIDITAS, LEVERAGE DENGAN DISCREATIONARY ACCRUAL Pada PT. ALSY." Jurnal Perspektif 18, no. 1 (2020): 45–53. http://dx.doi.org/10.31294/jp.v18i1.7195.
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Abstract - Discreationary accruals as a representative in earnings management calculation parameters. The theory in which calculated by excluding total accruals with non-discreationary accruals. This model uses Total Accrual (TA) which is classified into discreationary accrual (DA) and non discreationary accrual (NDA). This research process aims to determine the process of managing management responsibilities for financial reporting for shareholders there is no miss information. The earnings management method is part of the accounting method used in financial reporting for investors.The analysis used in this study is to see the extent of the influence of free cash flow, internal audit, liquidity ratios, leverage ratio to discreationary accrualrs as representatives of earnings management. Measurement with the ratio approach and the results of the company's internal audit process. The research sample service companies in the field of loss insurance which are listed on the Indonesia stock exchange quarter 1 to quarter 4 during the period 2015 - 2018. Regression panel data is used to test hypotheses. Hypothesis results found no significant correlation between free cash flow, liquidity and leverage with discreationary accruals. Internal audit and free cash flow affect discretionary accruals with a confidence level of 90%, meaning a standard error of 10%. Whereas leverage and liquidity do not have impact with discretionary accruals. This means thus the performance of both there is no correlation to earnings management in the practice of the company under study. Keywords: free cash flow, liquidity ratio, leverage ratio, internal audit, discreationary accruals
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Lim, Lucy. "Reexamining the influence of large clients on office-level auditor reporting decisions." American Journal of Business 31, no. 1 (2016): 4–16. http://dx.doi.org/10.1108/ajb-06-2015-0020.
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Purpose – This paper revisits the Reynolds and Francis’ (2001) study via the use of a more current dataset, incorporation of improvements into the accrual model and the use of actual fee data vs estimates. Using the improved analyses, the purpose of this paper is to examine whether more conservative auditors’ reports on larger clients are still evident. Design/methodology/approach – The paper follows Reynolds and Francis (2001) in using a regression model with White-adjusted t-statistics for the discretionary accrual model and a logistic model for going concern analysis. The most current discretionary accrual model is used to improve the original model, use actual fee data (not available previously), and add analyses using the two components of total fees (i.e. audit and non-audit fees). Findings – As opposed to Reynolds and Francis (2001), the results show that the Big Five auditors are less conservative with higher-paying clients as they allow their clients to have more discretionary accruals. While Reynolds and Francis (2001) found that auditors are more likely to report going concern opinions for higher-paying clients, the results in this paper does not show any difference in the propensity of auditors to issue going concern opinions. Originality/value – This study replicates Reynolds and Francis (2001) using more recent US data, applying the most recent discretionary accrual model, using the actual fee data, and adding analyses using total fees decomposition.
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Duffin, Duffin. "Analisis pengaruh discretionary accrual dan discretionary expenses terhadap nilai perusahaan sektor manufaktur di Bursa Efek Indonesia dengan good corporate governance sebagai variabel moderasi." Fair Value: Jurnal Ilmiah Akuntansi dan Keuangan 4, no. 9 (2022): 3854–70. http://dx.doi.org/10.32670/fairvalue.v4i9.1565.
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This research uses secondary data in the forms of annual reports and financial statements of manufacturing companies which are published in Indonesia Stock Exchange. There are 47 companies that are used as samples in this research, in which 5 years data are used ranging from year 2012 - 2016. This research uses multiple linear regression analysis. This research shows that discretionary accrual partially has positive influence on model 1 and negative influence on model 2 but not significant towards firm value, meanwhile discretionary expenses has positive and significant influence towards firm value. For good corporate governance practices, none of them can moderate the relationship between discretionary accrual towards firm value. On the other hand, independent commissioner composition, audit quality, institutional ownership of company's shares, and management ownership of company's shares can moderate the relationship of discretionary expenses towards firm value. The influence of discretionary accrual and discretionary expenses is simultaneously significant towards firm value with the value of determination coefficient of 26,1% on model 1. Meanwhile on model 2, the influence of discretionary accrual and discretionary expenses with good corporate governance as moderating variable is significant towards firm value with the value of determination coefficient of 83,9%.
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Collins, Daniel W., Raunaq S. Pungaliya, and Anand M. Vijh. "The Effects of Firm Growth and Model Specification Choices on Tests of Earnings Management in Quarterly Settings." Accounting Review 92, no. 2 (2016): 69–100. http://dx.doi.org/10.2308/accr-51551.
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ABSTRACT Commonly used Jones-type discretionary accrual models applied in quarterly settings do not adequately control for nondiscretionary accruals that naturally occur due to firm growth. We show that the relation between quarterly accruals and backward-looking sales growth (measured over a rolling four-quarter window) and forward-looking firm growth (market-to-book ratio) is non-linear. Failure to control for the effects of firm growth and performance on innate accruals leads to excessive Type I error rates in tests of earnings management. We propose simple refinements to Jones-type models that deal with non-linear growth and performance effects and show that the expanded models are well-specified and exhibit high power in quarterly settings where one is testing for earnings management. The expanded models are able to identify the presence of earnings management in a sample of restatement firms. Our findings have important implications for the use of discretionary accrual models in earnings management research. JEL Classifications: C15; M40; M41.
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Slamet, Abdul, and Provita Wijayanti. "RESPON PERUBAHAN TARIF PAJAK PENGHASILAN, INSENTIF DAN NON-INSENTIF PAJAK TERHADAP MANAJEMEN LABA." Jurnal Akuntansi Indonesia 5, no. 2 (2016): 115. http://dx.doi.org/10.30659/jai.5.2.115-130.
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Tax is an obligation that must be paid by the company, the greater the income the company the greater the tax due. Management expects the tax payment detail to allow management to do the engineering to minimize the income tax burden. This study aims to examine the effects of changes in income tax rates that Law. 36 of 2008 on Income Tax on discretionary accrual due to a decrease in income tax rates between 2009 and the Agency for the year 2010 is the year 2009 by 28% and in 2010 dropped to 25%. In addition, this study also aims to determine the impact of tax and non tax incentives as well as the percentage of shares traded on the Stock Exchange of earnings management behavior. Sample of this study is manufacturing companies listed on the Indonesia Stock Exchange, which has published its financial statements from 2009-2010. Methods of analysis in this study using multiple regression analysis to determine the effect of independent variables earnings pressure, debt level, earningsbath, firm size, managerial ownership and the percentage of shares) against the dependent variable (discretionary accruals) and using independent sample t-test for the different test equipment. independent sample t-test was used to examine differences in the level of discretionary accruals between 2009 and 2010 after a decline in income tax rates. The results showed that before and after the reduction in tax rates, the management was not convicted of discretionary accruals to make savings income. This suggests that management in Indonesia did not take action to make opportunistic earnings management in order to decrease the tax rate Agency 2010. From the regression resultsof tax incentives and the percentage of shares traded on the Stock Exchange a significant effect on discretionary accruals, non-tax incentives only to have a significant earnings pressure on discretionary accruals, while the level of debt, earnings bath, firm size and managerial ownership has no significant effect on discretionary accruals.
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Apridasari, Esty. "Analisis Manajemen Laba Perbankan Konvensional dan Perbankan Syariah di Bursa Efek Indonesia." AKTSAR: Jurnal Akuntansi Syariah 3, no. 1 (2020): 93. http://dx.doi.org/10.21043/aktsar.v3i1.7116.
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<p class="bdabstract">Earnings management in financial statements can be caused by accrual accounting policies applied and conflicts of interest in agency theory. This study aims to analyze and compare earnings management in financial statements of conventional banks and Islamic banks. This research is a descriptive study of banks listed on the Indonesia Stock Exchange in 2017-2018. Earnings management is measured by accrual earnings management proxied by discretionary accruals using the modified-Jones model. The samples are 10 Islamic banks and 32 conventional banks. The results show that the comparison of the average absolute value of discretionary accruals for conventional banks is 0.0659 and for Islamic banks is 0.0478. It shows that discretionary accruals for Islamic banks are generally smaller compared to conventional banks. This indicates that the level of earnings management in Islamic bank financial statements is lower than conventional banks.</p>
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Kothari, S. P., Andrew J. Leone, and Charles E. Wasley. "Performance matched discretionary accrual measures." Journal of Accounting and Economics 39, no. 1 (2005): 163–97. http://dx.doi.org/10.1016/j.jacceco.2004.11.002.
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Ömer, Faruk Büyükkurt. "Detection of the Relationship Between Firm Age and Discretionary Accrual Manipulation Practices: Evidence From BIST." JOURNAL OF ACADEMIC SOCIAL RESOURCES (ASR JOURNAL) 9, no. 5 (2024): 423–29. https://doi.org/10.5281/zenodo.13995393.
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This study examines the relationship between firm age and discretionary accrual manipulation in manufacturing firms listed on BIST (Borsa Istanbul) from 2013 to 2019. By applying stringent data selection criteria, the final sample includes 1,063 firm-year observations drawn from various manufacturing sub-sectors. Discretionary accruals, detected via the Dechow Model, serve as the study’s dependent variable. To ensure a comprehensive analysis, several control variables are incorporated: financial leverage, firm size, return on assets (ROA), and market-to-book ratio. These controls are essential to isolate the effect of firm age on accrual manipulation practices. Additionally, year-specific and sub-sector-specific dummy variables are utilized to account for temporal and industry-related variations that may impact the levels of discretionary accruals. The methodological framework employs a fixed-effect panel data multiple linear regression model. This choice is validated through the application of the Breusch-Pagan Lagrange Multiplier (LM) Test and the Hausman Test, which confirmed the fitness of the fixed-effects approach over alternative models. The empirical findings of the study reveal a significant inverse relationship between firm age and discretionary accrual manipulation. Specifically, the results suggest that older firms are less likely to engage in such practices, potentially due to their established reputations and more robust internal controls. Furthermore, the study finds that larger firms and firms those with higher performance metrics, as measured by return on assets, also exhibit significant impacts on income-increasing discretionary accrual manipulation. These insights contribute to the existing literature by highlighting the influence of firm age, size, and performance on earnings management practices within the manufacturing sector. The findings have practical implications for investors, regulators, and policymakers aiming to enhance the transparency and reliability of financial reporting. <strong>Keywords:</strong> Financial Accounting, Accrual Manipulation, Firm-Age
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Dokas, Ioannis. "Earnings Management and Status of Corporate Governance under Different Levels of Corruption—An Empirical Analysis in European Countries." Journal of Risk and Financial Management 16, no. 10 (2023): 458. http://dx.doi.org/10.3390/jrfm16100458.
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This study investigates the effect of the characteristics of the board of directors on the accrual and real earnings management level, focusing on the role of the corruption level. The employed dataset consists of 469 European-listed firms from 2011 to 2019. Using a fixed-effect panel data regression model, the results documented that larger boards lack coordination and communication in less corrupt economies, facilitating earnings manipulation through accruals and sales. In highly corrupt countries, oversized boards are associated with increased manipulation of production costs and discretionary expenses. Board meetings are positively related to accrual and sales manipulation in low-corruption countries, and board independence leads to reducing discretionary expenses regardless of corruption level. Board tenure negatively affects accruals and discretionary expenses but tends to increase manipulation through production costs in low-corruption contexts. Additionally, when the CEO serves as the board chairman, it encourages the manipulation of discretionary expenses while reducing real earnings manipulation through sales and production costs. In aggregate, the level of corruption can influence a board’s effectiveness under specific conditions.
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Ayers, Benjamin C., John (Xuefeng) Jiang, and P. Eric Yeung. "Discretionary Accruals and Earnings Management: An Analysis of Pseudo Earnings Targets." Accounting Review 81, no. 3 (2006): 617–52. http://dx.doi.org/10.2308/accr.2006.81.3.617.
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We investigate whether the positive associations between discretionary accrual proxies and beating earnings benchmarks hold for comparisons of groups segregated at other points in the distributions of earnings, earnings changes, and analystsbased unexpected earnings. We refer to these points as “pseudo” targets. Results suggest that the positive association between discretionary accruals and beating the profit benchmark extends to pseudo targets throughout the earnings distribution. We find similar results for the earnings change distribution. In contrast, we find few positive associations between discretionary accruals and beating pseudo targets derived from analysts-based unexpected earnings. We develop an additional analysis that accounts for the systematic association between discretionary accruals and earnings and earnings changes. Results suggest that the positive association between discretionary accruals and earnings intensifies around the actual profit benchmark (i.e., where earnings management incentives may be more pronounced). We find similar effects around the actual earnings increase benchmark. However, analogous patterns exist for cash flows around the profit and earnings increase benchmarks. In sum, we are unable to eliminate other plausible explanations for the associations between discretionary accruals and beating the profit and earnings increase benchmarks.
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Piosik, Andrzej. "Ownership structure of a company and accounting earnings management." Zeszyty Teoretyczne Rachunkowości 2019, no. 103 (159) (2019): 135–50. http://dx.doi.org/10.5604/01.3001.0013.3079.
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The objective of our study is to investigate whether the ownership structure of a company, including ownership concentration, managerial ownership and the presence of institutional investors, affects accrual earnings management practices. We first modelled discretionary accruals using the modified approach of Jones (1991), and then we built the model describing the relationship between discretionary accruals and elements of ownership structure of companies and control variables, determining regression using the least square method. We provided evidence of negative dependence between the magnitude of accrual earnings management and shareholder concentration. We do not corroborate the relationship between accrual earnings management and managerial ownership. The presence of institutional investors reduces the magnitude of accrual earnings management. We do not provide evidence that the presence of State Treasury affects accrual earnings management. We do not confirm that accrual earnings management is used for meeting or beating earnings benchmarks.
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ABU, Emmanuel Ndakinpa, Kenny Adedapo SOYEMI, and Sunday Aderogba ADEBAYO. "EXTERNAL AUDITOR, BOARD ATTRIBUTES, ACCRUAL AND REAL EARNINGS MANAGEMENT LINKAGE: NEW EVIDENCE FROM EMERGING ECONOMY." Modern Management Review 28, no. 1 (2023): 7–28. http://dx.doi.org/10.7862/rz.2023.mmr.01.
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This paper further examines the influence of external auditor and board attributes on incidence of discretionary accruals and real earnings management in Nigeria. The sample size comprises fifty (50) purposively selected quoted non-financial firms for a 7 year period (2014–2020), culminating into a 350 dataset. The descriptive statistics depict absence of both discretionary accruals and real earnings management with either classifications dependent upon the auditor-type, board independence and profitability among quoted non-financial firms in Nigeria. The regression results indicate reduction in discretionary accruals owing to concerted audit efforts and lower board size while large profitable firms still possess the tendencies to use discretionary accruals in manipulating earnings. On real manipulative propensities by management, audit fees contribute greatly while auditor-type and presence of female directors on corporate boards exhibit negative and statistically significant association with real earnings management.
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Abdoli, Mohammad Reza, and Mahmoud Abolghasemi. "Relation of non-executive directors and ownership concentration with discretionary accrual accounting." International Academic Journal of Economics 06, no. 01 (2019): 141–52. http://dx.doi.org/10.9756/iaje/v6i1/1910010.
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Chen, Changling, Alan Guoming Huang, and Ranjini Jha. "Idiosyncratic Return Volatility and the Information Quality Underlying Managerial Discretion." Journal of Financial and Quantitative Analysis 47, no. 4 (2012): 873–99. http://dx.doi.org/10.1017/s002210901200018x.
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AbstractVariation in idiosyncratic return volatility from 1978 to 2009 is attributable to discretionary accrual volatility and the correlation between premanaged earnings and discretionary accruals reflective of information quality across firms. These results are robust to controls for firm operating uncertainty, growth options, business-cycle variations, and firm age and industry effects, and they highlight the importance of managerial discretion in determining idiosyncratic volatility.
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Simamora, Alex Johanes. "Effect of earnings management on earnings predictability in information signaling perspective." Jurnal Akuntansi 22, no. 2 (2018): 173. http://dx.doi.org/10.24912/ja.v22i2.346.
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This research is aimed to examine (1) effect of discretionary and innate accrual on earnings predictability (2) effect of market share and financial health on relationship between real earnings management and earnings predictability. This research use manufacture firms listed in Indonesian Stock Exchange 2003-2015 as research sample, with 2013-2014 as research period. Accrual earnings management is measured by discretionary and innate abnormal accrual. Real earnings management is measured by aggregate of abnormal cash flow of operation, abnormal production, abnormal discretionary expenses. As expected, discretionary accrual as opportunist act does not support earnings predictability, while innate accrual as information signaling of business model improves earnings predictability. Real earnings management as information signaling of market share and financial health improves earnings predictability as well. In general, earnings management as information signaling is more likely to communicate condition of firm and leads to informativeness of earnings.
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Farshadfar, Shadi, and Reza Monem. "Discretionary accruals and the predictive ability of earnings in the forecast of future cash flows: Evidence from Australia." Corporate Ownership and Control 9, no. 1 (2011): 597–608. http://dx.doi.org/10.22495/cocv9i1c6art3.
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We examine whether discretionary and non-discretionary accruals improve the predictive ability of earnings for forecasting future cash flows in an Australian context. Using both within-sample and out-of-sample forecasting tests; we demonstrate that discretionary accruals improve the predictive ability of earnings in the forecast of future cash flows. Further, discretionary and non-discretionary accruals and direct method cash flow components together are more useful than (i) aggregate earnings, (ii) aggregate cash flow from operations and total accruals, and (iii) aggregate cash flow from operations, discretionary accruals and nondiscretionary accruals.
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Kalgo, Sani Hussaini, Bany-Ariffin A.N., Hairul Suhaimi Bin Nahar, and Bolaji Tunde Matemilola. "Does Leverage Constrain Real and AEM Around IPO Corporate Event? Evidence from the Emerging Market." Global Business Review 20, no. 2 (2019): 354–67. http://dx.doi.org/10.1177/0972150918825196.
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The article investigates whether Malaysian initial public offering (IPO) firms engage in real and accrual earnings management (AEM) and examines the impact of leverage on the earnings management’s discretionary behaviour of the firms for the period of 2003–2013. The Dechow, Sloan, and Sweeney (1995, The Accounting Review, 70[2], 193–225) cross-sectional modified Jones model was used to estimate discretionary accruals, while Roychowdhury’s (2006, Journal of Accounting and Economics, 42[3]), 335–370) cross-sectional models were used to investigate abnormal real activity discretionary behaviour. The results indicate Malaysian IPO firms engage in real and accrual discretionary behaviour. The graphical presentations of the earnings’ management proxies indicate higher real and AEM for high-leverage firms. Similarly, the multivariate analysis indicates a positive relationship between leverage and earnings management, which is in tandem with the agency cost of free cash flow theory and debt hypothesis. It is also consistent with the pecking-order theory of capital structure. This study suggests that regulatory agencies and standard setters should continue to improve quality of accounting reports in order to protect investors’ invested capital.
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Kumar, Manish, and Rishabh Goswami. "EARNINGS MANAGEMENT AND FIRM’S SUBSEQUENT PERIOD PERFORMANCE: A STUDY ON NON-FINANCIAL INDIAN LISTED FIRMS." JOURNAL OF INTERNATIONAL BUSINESS AND ECONOMY 23, no. 1 (2022): 1–19. http://dx.doi.org/10.51240/jibe.2022.1.1.
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While studies internationally have found an association between earnings management and the firm’s future performance, there is limited literature concerning Indian firms. Prior research in the Indian context has revealed the existence of opportunistic accruals management. However, its impact on a firm’s future performance remains unexplored. Thus, this study examines the impact of accrual-based earnings management on future performance among listed non-financial Indian firms. This study estimates accruals management proxies for 2006-2017 using the widely accepted modified-Jones model of discretionary accruals. Firm performance is measured using ROA, ROE, and PE ratio. This study uses a one-step System Generalised Method of Moments (GMM) to address the problem of endogeneity in the dynamic panel model. The result from the estimator indicates that discretionary accruals have a negative impact on accounting-based performance measures (ROA and ROE) and a positive impact on the market-based performance measure (PE ratio). These results are consistent for the three estimators (OLS, FE, and GMM), establishing a robust relationship between accrual management and firm performance. The findings of this study are consistent with the signaling hypothesis and suggest the likelihood of accruals reversal.
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Alhadab, Mohammad. "Auditor report and earnings management: Evidence from FTSE 350 companies in the UK." Risk Governance and Control: Financial Markets and Institutions 6, no. 4 (2016): 334–44. http://dx.doi.org/10.22495/rgcv6i4c2art11.
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This paper examines the relationship between audit report and real-based and accrual-based earnings management based on a UK sample. Prior research has mostly focused on US data and examined the relationship between auditor report (qualified vs. non-qualified) and earnings management (proxied by discretionary accruals), and found evidence that qualified audit report is positively associated with the level of discretionary accruals. Despite the importance of the role of audit firms to constrain the use of earnings management, there is no research to date has examined the relationship between auditor reports and real earnings management activities based on UK sample. This paper therefore fills this gap in the literature by providing the first evidence for UK FTSE 350 companies that auditor report is positively associated with real and accrual earnings management. The paper also provide evidence that firms received qualified audit report share different characteristics as compared to firms received un-qualified audit report.
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Robb, Sean W. G. "THE EFFECT OF ANALYSTS' FORECASTS ON EARNINGS MANAGEMENT IN FINANCIAL INSTITUTIONS." Journal of Financial Research 21, no. 3 (1998): 315–31. http://dx.doi.org/10.1111/j.1475-6803.1998.tb00688.x.
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AbstractI test a market consensus hypothesis about earnings management in the banking industry. This hypothesis states that when analysts have reached a consensus in their earnings forecasts, managers have an incentive to manage earnings through discretionary accruals to achieve market expectations. A sample of banks is partitioned based on the degree of forecaster consensus, and the behavior of one discretionary accrual, the loan loss provision, is predicted for each partition. The results suggest bank managers make greater use of the loan loss provision to manipulate earnings in a discretionary manner when analysts have reached a consensus in their earnings predictions.
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Adiguzel, Humeyra. "Classification Shifting in the Income-Decreasing Discretionary Accrual Firms." International Journal of Financial Research 8, no. 3 (2017): 187. http://dx.doi.org/10.5430/ijfr.v8n3p187.
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This study investigates whether managers use classification shifting to classify operating expenses as non-operating. Using a methodology similar to McVay (2006), I find no evidence of classification shifting between operating and non-operating expenses. However, I find evidence that managers classify operating expenses as non-operating in the absence of income decreasing accrual management. This finding can be explained that income-decreasing accrual management both affects operating and non-operating expenses and measuring classification shifting without considering discretionary accrual management produces meaningless results.
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Aryannejad, Nasim, Mohammadhossein Ghaemi, and Keyhan Maham. "The role of earnings management in the relationship between accruals and market value." Investment Management and Financial Innovations 15, no. 1 (2018): 236–44. http://dx.doi.org/10.21511/imfi.15(1).2018.20.
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The paper aims to clarify the role of earnings management in the relationship between accruals and the market value of companies. Previous studies suggest that some managers, for providing a desirable image of their performance, manage their profits through distorting cash or accruals. Consequently, investors rely on this information and estimate inaccurate stability of accruals which lead to mispricing phenomenon. Finally, the returns earned by the investors will not be equal to the expected return and thus the accrual anomaly will be created.To this aim, two hypotheses were developed and three regression models were applied to analyze the data. To analyze and estimate the models employed, the financial information of 110 companies listed on the stock exchange between years 2008 to 2014 is used. A selective approach to test the hypotheses is studying cross-sectional data.After conducting statistical tests, the results showed that discretionary accruals through which earnings management is done are improperly valued by the market, but the issue is not applicable regarding the non-discretionary accruals. Based on the close relationship between earnings management and discretionary accruals it can be found that earnings management can have an effect on the relationship between accruals and market value.
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Rohman, Abdul. "Analysis Effect of Accrual Discretion Against SILPA (SIKPA) Budget Calculations on Local Government." SRIWIJAYA INTERNATIONAL JOURNAL OF DYNAMIC ECONOMICS AND BUSINESS 2, no. 4 (2018): 293. http://dx.doi.org/10.29259/sijdeb.v2i4.293-316.
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The research we carry out is aimed at researching the implementation of measures taken by the local government (discretionary accruals) to the substantial amount of the budget obtained local governments in the current year. The government has issued regulations governing the Home Minister on the implementation of government's implementation of accrual based accounting system. Also, the government has issued Government Regulation No. 71 of 2010 concerning the Government Accounting Standard (PSAP) based on accrual. Governments in developing government accounting standards has also attempted to adopt international public sector accounting standards (IPSAS).Our study is a continuation of a research study before we take on research on the level of accrual in the financial statements of Local Government and research on the effect of discretionary accruals on revenue of local governments. This study uses some model approach
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Liu, Alfred Zhu, K. R. Subramanyam, Jieying Zhang, and Charles Shi. "Do Firms Manage Earnings to Influence Credit Ratings? Evidence from Negative Credit Watch Resolutions." Accounting Review 93, no. 3 (2017): 267–98. http://dx.doi.org/10.2308/accr-51855.
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ABSTRACT We investigate whether issuers on negative credit watch manage earnings upward and whether such earnings management favorably influences the watch resolution. We find that rating, industry, and performance matched discretionary accruals reported during negative watch are significantly higher than their respective pre- and post-watch levels, after controlling for accrual reversal. Consistent with its opportunistic nature, we find that accrual management increases with issuers' incentives to avoid downgrade, and decreases with their earnings management constraints and the strength of the external monitoring. Surprisingly, such accrual management significantly increases the likelihood of a favorable resolution—issuers in the top half of the discretionary accruals distribution are 24 percent less likely to be downgraded than those in the propensity score matched bottom half. We find that issuers that avoid downgrades through income-increasing accrual management significantly underperform those that do not over the ensuing year, mitigating the signaling or measurement error explanations for our results. Finally, we find that accrual management does not reflect attempts to improve short-term credit quality. JEL Classifications: M41; G29; G38.
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Kotim, Kotim, Wahidahwati Wahidahwati, and Nur Fadjrih. "PENGARUH ASIMETRI INFORMASI, LEVERAGE, DAN KOMPENSASI BONUS TERHADAP EARNING MANAGEMENT PADA PERUSAHAAN GO PUBLIC." Jurnal Ilmu Manajemen dan Akuntansi Terapan (JIMAT) 14, no. 1 (2023): 77. http://dx.doi.org/10.36694/jimat.v14i1.439.
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The study aims to examine 1) The effect of Information asymmetry on earning management, 2) The Effect of bonus compensation on earning management, 3) The leverage effects on earning management of the manufacturing companies that were anlisted in BEI. The independent variables applied are information asymmetry, leverage and bonus. The methodology used multiple linear regression analysis and purposive sampling which comprising the whole number of 162 sample in 2008-2016. The research findings indicated that between the listed variables, information asymmetry and leverage hold positive impacts on profit management of long term discreationary accrual, but did not hold any on short term discretionary accrual. Meanwhile bonus hold positive impacts on profits management of short term discretionary accrual but did not hold any on long term discretionary accrual.
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Mulyono, Kasmawati Erlinda N. G., and Umi Murtini. "PENGARUH PERUBAHAN UNDAI\G-I.JNDAIIG PERPAJAKAN NOMOR 17 TAHUN 2OOO TERHADAP MANAJEMEN LABA." Jurnal Riset Akuntansi dan Keuangan 5, no. 2 (2009): 1. http://dx.doi.org/10.21460/jrak.2009.52.154.
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Penelitian ini bertujuan menguji penganth perabahan undang-undang perpajakan nomor 17 tahun 2000 terhadap manajemen laba. Penelitian ini menggunakan 131 perusahaan manufaktur yang listing di Bursa Efek Indonesia (BEI). Periode penelitianadaloh tahun 2000 dan 2001. Yariobel yang digunakan untuk mmdeteksi manajernen laba adalah discretionary accruls. Yariabel dependen yang digunakan adalah totalaccruals. Yariqbel indepmden dalam penelitian ini adalah total aWiva tetap (PPE) dan delta revenue (pendapatan tahun t dila,rangi pendapatan tahun t-1).dilatrangi deltaqccount receivable (piutang tahun t dilatrangi piutang tahun t-l).m Berdasorkan hasil uji Peringkat Bertanda Wilcoxon, diperoleh hasil terdapat perbedaan manajemen labasebelum dan sesudah perubahan undang-undang, sehingga dapat disimpulkan bahwa perubohan undang-undang perpajakan nomor 17 tahun 2000 berpengaruh terhadap.tnanajemen laba. Kata kunci: Manajanen Laba, Total Accrual, Discretionary Accruals, Nondiscretionary Accruals, [tndang-undang Perpajakan No. 17 tahan 2000.
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Fitriana, Nur, and Siti Samsiah. "Moderasi Manajemen Laba Pada Hubungan Akrual Diskresioner Terhadap Kualitas Laba." Jurnal Ekonomi Manajemen dan Bisnis (JEMB) 1, no. 2 (2023): 117–20. http://dx.doi.org/10.47233/jemb.v1i2.537.
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This research is a quantitative study with the quality of profit as a dependent variable. This study examines the effect of discretionary accrual relationships on the quality of profit directly and moderated by profit management. The research sample is a contractor company in Pekanbaru Riau. The results showed that discretionary accruals do not have a direct influence on the quality of profits, but after the moderation of profit management, the quality of profits can affect the quality of profits
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Narulita, Friska Dhea, Rahmawati Nur Baderi, and Hwihanus Hwihanus. "The Impact of Fraud on the Detection of Fraud in Financial Statements and Discretionary Accruals (Meta-Analysis Study)." Journal of Advances in Accounting, Economics, and Management 1, no. 4 (2024): 1–16. http://dx.doi.org/10.47134/aaem.v1i4.348.
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This article discusses the impact of fraud-on-fraud detection of financial statements and discretionary accruals through meta-analysis studies. Financial statement fraud is a serious problem that is increasingly prevalent in the global capital market, especially in developing countries such as China. This has driven the need for more sophisticated and effective detection methods. This study aims to identify factors that can affect the detection of financial statement fraud as well as the impact of fraud on the detection of financial statement fraud and discretionary accrual. This article also seeks to find better solutions in dealing with discretionary accruals that can affect investment decisions and public confidence in companies. The findings of the meta-analysis show that factors such as manipulation of accounting records, misrepresentation of information, and errors in the application of accounting principles can affect fraud detection. In addition, the impact of fraud on the detection of fraud in financial statements and discretionary accruals is also discussed comprehensively. This article suggests the need for more dynamic and responsive fraud detection methods to evolving risks.
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Comporek, Michał. "Determinants of the capital structure and accrual-based earnings management." Zeszyty Teoretyczne Rachunkowości 46, no. 1 (2022): 9–27. http://dx.doi.org/10.5604/01.3001.0015.7985.
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Purpose: The main purpose of the paper is to examine the relationship between the value of discretionary accruals and the legal and economic determinants of capital structure, which are taken into account in static trade-off theory and pecking order theory. Methodology/approach: Discretionary accruals were extracted using the Jones model and the Kang-Sivaramakrishnana model. The empirical research is based on regression analyses, variable distribution statistics, and Spearman's rank correlation coefficient analyses, among others. The study covered 72 public industrial enterprises listed on the Warsaw Stock Ex-change. Findings: In the studied sample, there are statistically significant relationships be-tween discretionary accruals and variables such as effective tax rate, non-debt tax shield, operating risk, enterprise size, and the operating profitability of assets. Research limitations/implications: Due to the limited sample, the research results cannot be generalized to all industrial enterprises. Moreover, the indicators of good-ness-of-fit of the regression models to the empirical data are low, which indicates the need to further explore this field of research. Originality/value: The presented research methodology is innovative in relation to the Polish capital market. Previous empirical research on this issue is limited to showing the relationship between financial leverage and discretionary accruals.
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Meihami, Bahram, Zeinab Varmaghani, and Hussein Meihami. "An Investigation on the Earnings Quality in Companies (Evidence from Iran)." International Letters of Social and Humanistic Sciences 11 (September 2013): 91–99. http://dx.doi.org/10.18052/www.scipress.com/ilshs.11.91.
Full textAbstract:
A considerable focus of bottom-line income losses is important in the case of investigating quality of earnings. The future of stock returns is all associated with accruements that are in relation with reliability, and negativity. Earning increases that are accompanied by high accruals, suggesting inferiority of earnings, are related with poor future returns. This study describes the investigation of different hypotheses earnings manipulation, extrapolative fundaments about future growth, and under reaction to changes in business conditions to explain accruals’ predictive power. Differentiations between the hypotheses are grounds on operating performance, the behavior of individual accrual items, discretionary versus fixed investment trust components of accruals, and special items. In the main hypothesis we tested stock return and Earning Quality separately. In this investigation firms in according to a mount of accruals. Later on the validity using within-industry comparisons, and data on Tehran stocks was checked. This means that earnings management occurs with a time lag by market participants. In this research it was indicated that components of accruals including changes in accounts receivable, inventory, other current assets, current liabilities and other current liabilities have not significant effect on stock return. It was also indicated that for discretionary accruals, decreasing of stock return is greater than the decreasing of stock return for non-discretionary accruals.