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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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Eldenburg, Leslie G., Katherine A. Gunny, Kevin W. Hee, and Naomi Soderstrom. "Earnings Management Using Real Activities: Evidence from Nonprofit Hospitals." Accounting Review 86, no. 5 (2011): 1605–30. http://dx.doi.org/10.2308/accr-10095.
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ABSTRACT We extend the literature on earnings management through real operating decisions by providing insight into the types of expenditures (core versus noncore and operating versus non-operating activities) affected by earnings management. We partition a sample of California nonprofit hospitals based on their earnings management incentives. We find that expenditures on non-operating and non-revenue-generating activities appear to decrease in hospitals with incentives to engage in such behavior, while core patient care activities remain unchanged. We also find evidence of earnings management in non-core operational expenses. Second, we analyze real earnings management related to pay-for-performance incentives and find that hospitals with stronger performance incentives exhibit a significant incremental decrease in expenditures. Finally, we examine two different kinds of behavior to discriminate between earnings management and good operational decisions and provide weak evidence to support opportunism rather than good management. Together, these results provide evidence of the use of real operating decisions to manage earnings.
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Canace, Thomas G., and Leigh Salzsieder. "The Timing of Asset Purchases to Achieve Earnings Thresholds." Journal of Management Accounting Research 28, no. 1 (2015): 81–106. http://dx.doi.org/10.2308/jmar-51106.
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ABSTRACT This study examines whether managers use capital investment decisions, and the resulting depreciation expense, to achieve quarterly earnings thresholds. We also address whether these actions merely facilitate short-term earnings management or whether firms may trade off investment decisions to deliver earnings. We posit that managers may view capital expenditures as an alternative for earnings considerations because of the process for capital expenditure decision making and the accounting for these investments. Our findings suggest that managers use discretion over capital expenditures to achieve two well-documented earnings thresholds, but that these decisions largely reverse in the following quarter. We document the deferral of capital expenditures to avoid depreciation for industries where the median useful life averages approximately seven years. Cross-sectional tests also suggest that the use of capital expenditures for achieving thresholds varies depending upon the firm's capital intensity, remaining book value of assets, operating cash flow constraints, CEO horizon, and fiscal quarter. Data Availability: Data are available from the authors upon request.
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Antonucci, Yvonne Lederer, and James J. Tucker. "Responding to Earnings-Related Pressure to Reduce IT Operating and Capital Expenditures." Information Strategy: The Executive's Journal 14, no. 3 (1998): 6–14. http://dx.doi.org/10.1080/07438613.1998.10744586.
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Banker, Rajiv D., Shunlan Fang, and Mihir N. Mehta. "Anomalous Operating Performance During Economic Slowdowns." Journal of Management Accounting Research 32, no. 2 (2019): 57–83. http://dx.doi.org/10.2308/jmar-52547.
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ABSTRACT Operating performance is an important and widely used measure for evaluating firms. This paper documents that, contrary to the common belief, firms experiencing sales declines during economic slowdowns exhibit higher operating margins than firms experiencing sales declines during normal periods. This anomalous behavior results from (1) a decrease in costs of goods sold overall during economic slowdowns and (2) an additional reduction in SG&A costs other than expenditures that could affect the competitiveness (i.e., R&D and advertising) of sales-down firms. The relatively higher operating performance reported by sales-down firms during economic slowdowns is associated with improvements in operational efficiency and cannot be explained as earnings management or simply as a response to financial distress or a large sales decline. Our findings provide important insights into how macroeconomic conditions affect firms' operating performance in a predictable way.
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Hadi, Samsul, Syahril Djaddang, and Suyanto. "Pengujian Kandungan Informasi Arus Kas Dan Laba Akuntansi Terhadap Return Saham: Studi Pada Perusahaan LQ45." JRB-Jurnal Riset Bisnis 1, no. 1 (2019): 51–59. http://dx.doi.org/10.35592/jrb.v1i1.12.
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This study aimed to analyze the effect of changes in cash flow from operating activities, cash flows from investing avtivities, cash flow from financing activities and accounting earnings on stock returns in the Indonesian capital market. Research conducted on 15 companies listed in the LQ45 index in the Indonesia Stock Exchange (BEI). Observations were made for 4 years from 2011 to 2014. Data were analyzed using data panel analysis. The results show that operating cash flow and financing cash flow significantly influence stock returns. This means any increase in operating cash flow and in expenditures for financing activities followed by an increase in stock returns. Accounting earnings and cash flows have no significant effect on stock returns, since the accounting information and investment cash flows of the sample companies do not contain relevant information and market anomalies occur due to investor failure to understand accrual information, cash flow, market risk and conservatism.
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Jamilah, Jamilah, and Nani Septiana. "Pengaruh Manajemen Laba Terhadap Kinerja Keuangan (Pada Perusahaan Sub Sektor Industry Food And Beverage Yang Terdaftar Di Bursa Efek Indonesia (BEI)." Jurnal Manajemen DIVERSIFIKASI 2, no. 2 (2022): 409–19. http://dx.doi.org/10.24127/diversifikasi.v2i2.982.
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The results of this study indicate that earnings management has a significant effect on return on assets. It can be seen from the tcount value of 2.436 and t table 2.179, which means that t count is greater than t table. So it can be explained that profit management in the food and beverage industry sub-sector companies listed on the IDX in 2017-2019 has a significant effect on financial performance. Where earnings management describes the effect or effect of cash income and expenditures to ensure that the business generates net operating income.Keywords: Earnings Management, Financial Performance, Return On Assets (ROA)
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Juliani, Meily, and Angelline Tu. "Cash Holding pada Perusahaan Non-Keuangan di Indonesia." E-Jurnal Akuntansi 32, no. 11 (2022): 3460. http://dx.doi.org/10.24843/eja.2022.v32.i11.p20.
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The aim of this study is to empirically prove the effect of accrual quality, earnings quality, company size, market to book ratio operating cash flow, debt financing, capital expenditure, net working capital on cash holdings. The research population is non-financial companies listed on the Indonesia Stock Exchange for the 2017-2021 period. Hypothesis testing was carried out using panel regression analysis. The sampling method used in this study was purposive sampling with a total sample of 415 non-financial companies. The results of the study of firm size have a negative effect on cash holdings. market to book ratio, debt financing, net working capital, and operating cash flow have a positive relationship to cash holdings, while accrual quality, earnings quality, and capital expenditure have insignificant results.
 Keywords: Cash Holding; Firm Size; Earning Quality
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Canina, Linda, and Gordon Potter. "Determinants of Earnings Persistence and Predictability for Lodging Properties." Cornell Hospitality Quarterly 60, no. 1 (2018): 40–51. http://dx.doi.org/10.1177/1938965518791729.
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Accounting earnings are used extensively in the lodging industry for the purposes of incentive contracting, credit assessment, and valuation but we know little about the attributes of lodging properties’ accounting earnings and their determinants. Two important attributes of accounting earnings are persistence and predictability, which have been identified as key components of sustainable earnings. In this study, we examine a sample for lodging properties over a lengthy time-period to investigate the property-specific determinants of the persistence and predictability of lodging properties’ earnings. We find that barriers to entry, measured by the relative amount of marketing expenditures, have a positive impact on these earnings attributes. We also find that revenue diversification has a positive effect on these attributes, presumably through its impact on earnings stability. Finally, we find that resource rigidity, as measured by operating leverage and labor intensity, have a consistent dampening impact on persistence and predictability.
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Et. al., Dr Jyoti Prasad Kalita,. "A Study of Trend of Price/Net Operating Revenue and Earnings Yield of Selected Public Sector Companies in India." Turkish Journal of Computer and Mathematics Education (TURCOMAT) 12, no. 10 (2021): 5141–47. http://dx.doi.org/10.17762/turcomat.v12i10.5296.
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The study's aim is to uncover the Trend of Price/Net Operating Revenue and Earnings Yield of Selected Public Sector Companies in India. The analysis of variance is used in the analysis to determine the trend difference in Price/Net Operating Revenue and Earnings Yield of public sector companies. The research takes into account a variety of financial ratios from firms in the Maharatna and Navrtana categories. Study’s findings are extremely helpful to investors in determining the financial strength of PSUs. It has a huge effect on public-sector expenditure decisions.
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Dutta, Sunil, and Stefan Reichelstein. "Stock Price, Earnings, and Book Value in Managerial Performance Measures." Accounting Review 80, no. 4 (2005): 1069–100. http://dx.doi.org/10.2308/accr.2005.80.4.1069.
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This paper develops a multiperiod principal-agent model in which a manager must be given incentives to undertake investments and to exert personally costly effort. Investments are “soft” (e.g., intangible assets) and therefore entail measurement errors for the accounting system as it seeks to separate investments from operating expenditures. This separation is of no concern to the stock market, which draws on its own information about future cash flows resulting from current investments. The firm's stock price, however, reflects all value-relevant information, parts of which are not incentive relevant. Optimal incentive provisions must combine “forward-looking” market information with “backward-looking” accounting information. Under certain conditions, optimal performance measures can be expressed as a weighted average of economic value added (residual income) and market value added.
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Bae, Jin-Cheol, Xiyu Rong, Myung-In Kim, and Shi Cheng. "Does CSR Affect the Impact of Real Earnings Management on the Cost of Debt?" International Academy of Global Business and Trade 18, no. 3 (2022): 41–60. http://dx.doi.org/10.20294/jgbt.2022.18.3.41.
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Purpose - We explore how corporate social responsibility (CSR) plays a role in the debt market when companies engage in real earnings management. Specifically, we analyze the cost of capital of a company with real earnings management as measured by abnormally operating cash flows, abnormally production costs and discretionary expenditures, and examine the role of CSR in the relationship.
 Design/Methodology/Approach - The analysis sample is for Chinese publicly listed companies, the data were obtained from China Stock Market and Accounting Research (CSMAR), and the CSR data were collected from the Hexun database. We implemented OLS regression analysis by setting the proxies of real earnings management as dependent variable, cost of debt capital as a dependent variable, and CSR as a moderating variable.
 Findings - Our empirical results show that real earnings management significantly increases the cost of debt after controlling for discretionary accruals, another proxy variable for earnings management. Especially, we find that corporate social responsibility weakens the negative impact of real earnings management on the cost of debt.
 Research Implications - This study provides evidence that corporate social responsibility plays a significant role in mitigating the adverse impact of real earnings management on the debt market. Therefore, creditors in the debt market need to be more cautious in assessing the impact of real earnings management that may be underestimated due to high CSR performance.
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Ajay, Ranjitha, and R. Madhumathi. "Do corporate diversification and earnings management practices affect capital structure?" Journal of Indian Business Research 7, no. 4 (2015): 360–78. http://dx.doi.org/10.1108/jibr-01-2015-0008.
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Purpose – The purpose of this paper is to empirically examine the impact of earnings management on capital structure across firm diversification strategies. Design/methodology/approach – The study focuses on firms operating in the manufacturing sector (diversified and focused). Panel data methodology compares diversification strategies and identifies the impact of diversification strategy with earnings management practices on capital structure decision. Findings – International and product diversified firms have lower levels of leverage than focused firms in their capital structure. Asset-based earnings management is positive for diversified (market/product) firms. Earnings management using discretionary expenditure (project based) is found to be higher for market diversified but product-focused firms. Earning smoothing method is found to be significant for focused firms and shows a negative relationship with capital structure. Originality/value – This study offers an insight into the relationship between corporate diversification, earnings management and capital structure decisions of manufacturing firms. The results provide an important contribution to accounting and strategy literature. A distinction is made between market- and product-diversified firms and influence of earnings management practices (asset-based, project-based and earnings smoothing (ESM)) on capital structure decisions. Diversified firms (market/product) tend to have lower levels of leverage than focused firms and earnings management practices within firm groups significantly influence the capital structure decisions.
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Lee, Joonho, and Sung Gon Chung. "Analysts’ reactions to firms’ real activities management." Review of Accounting and Finance 18, no. 4 (2019): 589–612. http://dx.doi.org/10.1108/raf-05-2017-0105.
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Purpose Firms’ real activities management (RAM) can have a more detrimental effect on firms’ future performance than accrual earnings management. This paper aims to examine whether analysts, who play an important role as information intermediaries, understand the negative effect of RAM on firms’ future performance and respond to it accordingly. Design/methodology/approach The authors investigate whether analysts lower their earnings forecasts and stock recommendations of the firms with RAM. The authors measure RAM by examining firms’ abnormal decreases in discretionary expenses, abnormal increases in production and abnormal decreases in cash flow from operations following prior literature. Findings The authors find that after controlling for earnings surprises and other important firm characteristics, analysts lower their forecasts of future annual earnings and stock recommendations of the firms that show signs of RAM. Research limitations/implications First, as in other RAM studies, the results in this study are subject to measurement errors inherent in the estimation of RAM (i.e. abnormal production costs, abnormal CFO and abnormal discretionary expenditures). Second, we include only firm-year observations that barely make positive income in our samples following the previous study. This sample selection criterion helps increase the power of the test by examining the “suspect firms group,” which are more likely to engage in earnings management. However, one can challenge that our findings on the association between RAM and analysts’ reactions could be only case-specific and cannot be generalized. Practical implications This study contributes to the literature on earnings management and especially on RAM. Specifically, none of the previous studies clearly examines whether analysts understand the negative impact of RAM on firms’ future performance and respond accordingly, although there are studies showing the negative association between RAM and firms’ future operating performance and studies showing the negative association between analysts following and RAM. Thus, filling the gap, this study provides a specific reason for the negative association between the analyst following and real earnings management presented in previous studies. Social implications The findings will be of interest to regulators, who are concerned about the potential negative consequences in which tighter accounting standards can result. For example, Ewert and Wagenhofer (2005) theoretically demonstrate that tighter accounting standards can prompt more RAM instead of accounting earnings management. The study provides important evidence supporting that such suboptimal operating activities are closely watched by analysts and are potentially penalized by the market. If the market is able to detect RAM and allocate fewer resources to the firms that engage in it, then the concerns associated with the substitution effect between accrual-based earnings management and RAM can be diminished. Originality/value Prior research suggests that tighter accounting regulations (e.g. the Sarbanes-Oxley Act) prompt more RAM than accounting earnings management. The study provides evidence supporting that such suboptimal operating activities are closely watched by analysts and are potentially penalized by the market.
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HANDAYANI, R. SRI, NURFITRIANI NURFITRIANI, and MUHAMMAD MIFTAKHUL HUDA. "ANALISIS LAPORAN ARUS KAS DALAM MENILAI KINERJA KEUANGAN PADA PT BUMI SERPONG DAMAI TBK TAHUN 2021-2023." JURNAL AKUNTANSI DAN KEUANGAN 13, no. 1 (2024): 26–32. http://dx.doi.org/10.32520/jak.v13i1.3623.
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The objective of the research conducted is to assess the financial performance of PT. Bumi Serpong Damai, Tbk based on the analysis of cash flow ratios for the years 2021-2023. The tools used for analysis are the cash flow ratios, which consist of the operating cash flow ratio, the cash coverage ratio against interest, the capital expenditure ratio, the operating cash flow ratio against total debt, and the cash coverage ratio against net income.. The research method used is a quantitative descriptive method. The results of the study show that the operating cash flow ratio and the operating cash flow ratio against total debt have performed poorly in meeting the company's obligations during the years 2021-2023. The cash coverage ratio against interest and the capital expenditure cash flow ratio show good results during the years 2021-2023, indicating that the company has sufficient cash flow to cover interest expenses and taxes and to repay the principal debt. Meanwhile, the cash coverage ratio against net income shows good results in 2021-2022, where net income is supported by a larger operating cash flow, indicating good earnings quality; however, in 2023, it shows a poorer result
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Uzaimi, Achmad, Rowiyah Asengbaramae, Abdurrahman Abdurrahman, and Indira Januarti. "Combination impact of managerial ability and power on real earnings management practices: Evidence from Indonesia." BIO Web of Conferences 134 (2024): 04004. http://dx.doi.org/10.1051/bioconf/202413404004.
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The purpose of this study is to examine the combination impact of managerial ability and power on real earnings management. First test between CEO ability to real earnings management. Second between CEO power to real earnings management and third impact of combination independent variables. Deploying three real earnings management indicators, the ability of managers tends to significantly influence the operating cash flow and corporate discretionary expenditure and so the combination of both. Analysis on 468 observations of Indonesian manufacturing firm utilized fixed-effect approach. The finding of this study are first CEO ability less likely to engage with real earnings management as expected while lesser CEO power has no significant relation with real earnings management and combination of managerial ability and power has more impact on real earnings management. This research has extended the analysis of CEO attribute on real manipulation activities in firm practice. The practical consequence of the research, it is more likely to considering the cash flow and discretionary expenditure rather than managing inventory through decreasing production costs.
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Vaitiekuniene, Raminta, Kristina Sutiene, and Rytis Krusinskas. "Factors Affecting the Sustainability of Corporates in Polluting Sectors." Sustainability 16, no. 20 (2024): 8970. http://dx.doi.org/10.3390/su16208970.
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Corporate sustainability performance is gaining ever greater importance. The negative impact of climate change is manifested through heavy air, water and soil pollution. Polluting sectors, as the major players, are characterized by large amounts of emissions, waste and consumption of resources, and therefore have a larger negative impact on the environment. Companies operating in polluting sectors are recognized globally as the main sources of greenhouse gas emissions; thus, their performance is widely debated. Despite their character, such companies strive for higher profitability, better financial performance and operational efficiency. However, higher financial resources create the potential for innovation investments in companies. It is widely accepted that research and experimental development (R&D) expenditures enable new business ideas, models, products, services, and processes. However, while pursuing sustainability targets, financial results could be directed towards sustainability performance. The purpose of this paper is to analyze how the financial and innovation results of companies in polluting sectors interact with sustainability performance scores. For it, we have identified three essential pillars of sustainability: environmental, governance, and social. Using ordinary least squares (OLS) regressions, models were developed for each pillar of sustainability, including corporate financial performance indicators and R&D expenditures. The obtained results provide the insights that a company operating in polluting sector size and turnover significantly interacts with all pillars of sustainability. However, we also found that the corporate debt ratio, earnings ratio, and current liquidity have a significant relation only with environmental and social sustainability indicators.
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Dahal, Arjun Kumar, and Prem Bahadur Budhathoki. "Impact of Covid-19 Pandemic on the Net Profit and its Principal Determinants of Nepalese Commercial Banks." Journal of Management 5, no. 1 (2022): 39–57. http://dx.doi.org/10.3126/jom.v5i1.47761.
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COVID-19's influence on net profit and its main variables, such as net interest income, fee and commission revenue, and total operating income of Nepalese commercial banks, is explored. It also aims to determine the relationship between variables as well as the short- and long-term effects of interest income, fee and commission revenue, and operating income on commercial banks' net profit. The panel data of 27 commercial banks from 2011 (fiscal year 2010/11) to 2020 (fiscal year 2019/20) are examined and collected from the Nepal Rastra Bank's Banks Supervision Reports. The descriptive statistics, correlation analysis, panel unit root testing, and panel autoregressive distributed lag (ARDL) model are all employed. Net interest income and net profit (0.901), fee and commission income and net profit (0.823), and total operating income and net profit (0.823) all have a strong positive connection (0.800). The COVID-19 outbreak hurts commercial banks' net profits in both the short and long term. However, the research produced some disputed findings. For example, consider the long-term negative impact of total operating profit on commercial bank net profit and the short-term negative impact of net interest income on commercial bank net profit. It is suggested to decrease unneeded expenditures that may be cut without disrupting the banking business to enhance profit. The importance of e-banking might be stressed to slow the rapid decline in bank profit and other earnings. This article is unique because the researcher is not affected by other researchers' tools, methodologies, and findings.
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Fedyk, Tatiana, and Natalya Khimich. "R&D investment decisions of IPO firms and long-term future performance." Review of Accounting and Finance 17, no. 1 (2018): 78–108. http://dx.doi.org/10.1108/raf-09-2016-0147.
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Purpose The purpose of this paper is to link valuation of different accounting items to research and development (R&D) investment decisions and investigate how suboptimal R&D choices during initial public offering (IPO) are linked to future operating and market underperformance. Design/methodology/approach For firms with substantial growth opportunities, accounting net income is a poor measure of the firm’s performance (Smith and Watts, 1992). Therefore, other metrics such as R&D intensity are used by investors to evaluate firms’ performance. This leads to a coexistence of two strategies: if earnings are the main value driver, firms tend to underinvest in R&D; and if R&D expenditures are the main value driver, firms tend to overinvest in R&D. Findings The authors show that the R&D investment decision varies systematically with cross-sectional characteristics: firms that are at the growth stage, unprofitable or belong to science-driven industries are more likely to overinvest, while firms that are able to avoid losses by decreasing R&D expenditure are more likely to underinvest. Finally, they find that R&D overinvestment leads to future underperformance as evidenced by poor operating return on assets, lower product market share, higher frequency of delisting due to poor performance and negative abnormal stock returns. Originality/value While prior literature concentrates on R&D underinvestment as a tool of reporting higher net income, the authors demonstrate the existence of an alternative strategy used by many IPO firms – R&D overinvestment.
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Yegon, Charles Kiprotich, Willy Muturi, and Oluoch Oluoch. "Mediating Effect of Operating Cash Flow on the Relationship between Working capital and Financial Performance of Tea Firms in Kenya." International Journal of Finance 9, no. 1 (2024): 1–19. http://dx.doi.org/10.47941/ijf.1617.
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Purpose: Many corporate firms incorporating those in the tea sector are normally interested in their corporate financial performance. This is particularly in regard to the manner in which their activities pertaining financing, investing and operating assignments, not only aid in generating incomes but similarly on how to maintain and manage the expenditures and costs of all these activities to their very minimal, with an objective of optimizing on firm’s profitability. Notwithstanding the agitation for corporate financial performance generally and in particular profitability, still it is unclear on how the management of operating cash flow influence the corporate financial performance of firms in the tea industry in Kenya. The divergence in the management of operating cash flow policies across the tea industry is depicted in the discrepancy in the operating cash flow fluctuating from very high of these ratios to low current asset to total asset ratios.
 Methodology: Regardless of the fluctuation in the management of operating cash flow management policies, still there is inadequacy of theoretical and empirical explicitness on the manner in which management of operating cash flow influences profitability of these corporate firms.
 Findings: Empirically, numerous research studies arrives at varied findings on how operating cash flow is correlated with to the corporate financial performance. Theoretically, whereas the Miller- Orr model (1966) and Baumol model (1956) suggest optimal structuring of operating cash flow to enhance risk minimization and thus uplift financial performance. On the other hand, the Jensen and Meckling agency theory (1976) shortfall in pointing out an explicit relationship between the operating cash flow collection period and corporate financial performance. The stewardship theory of Gitman (1974), showcased an inverse association between operating cash flow collection period and profitability. The present research study is developed as a correlational research designed study employing the 40 multinationals and KTDA managed tea companies in tea sector in Kenya over a 6 year period covering 2014 to 2019. This forms 240 firm-year observations. Random-effects model regression model was employed after conducting specification tests for the model. The hypothesis testing was analyzed by employing the t-statistic at 95% confidence interval.
 Unique contributor to theory, policy and practice: Having the foundation on the philosophy of positivist research design, the research results established that operating cash flow as measured by the ratio of cash and cash equivalent to current liabilities showed that it does not mediate the relationship between working capital management decisions and financial performance as measured by earnings before interest and taxes to total assets. This research study was confined to the tea factories under multinational and KTDA managed tea firms in Kenya and recommendation thereof is an increased sample for all tea firms in Kenya could be included in order to check out how it will influence the robustness of the findings.
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Baumgarten, Daniel, Ute Bonenkamp, and Carsten Homburg. "The Information Content of the SG&A Ratio." Journal of Management Accounting Research 22, no. 1 (2010): 1–22. http://dx.doi.org/10.2308/jmar.2010.22.1.1.
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ABSTRACT: An increase in the ratio of SG&A costs to sales is associated with contradictory interpretations, namely a negative one due to deficient cost control and a positive one derived primarily from “cost stickiness.” Based on these conflicting explanations, we argue that it is crucial to distinguish between whether an increase in the ratio of SG&A costs to sales is actually intended by management in order to enhance future profitability. We regard an increase as intended if a company’s past SG&A ratio was below its industry average, representing efficiency in SG&A cost management. Indeed, these intended increases significantly enhance future earnings. We attribute this positive impact to lower future cost of goods sold and show that it is particularly strong if there is ample latitude for reduction of these costs. This finding suggests that intended SG&A expenditures partially represent investments in operating efficiency.
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Bruce, Nathan, Aklima Zerin Asha, and Kelvin Tsun Wai Ng. "Analysis of solid waste management systems in Alberta and British Columbia using provincial comparison." Canadian Journal of Civil Engineering 43, no. 4 (2016): 351–60. http://dx.doi.org/10.1139/cjce-2015-0414.
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In this paper, waste management in Alberta (AB) and British Columbia (BC) from 1996 to 2010 are examined with respect to generation characteristics and management efficiency. The daily average waste generation rates in AB and BC were 3.34 kg/capita and 2.50 kg/capita, respectively. It was found that annual family income has a positive relation with residential waste generation in both provinces, as did the proportion of educated citizens. Gross domestic product was positively related to non-residential waste generation in AB, and negatively related in BC. Annual agricultural farm cash receipts were positively related to non-residential waste generation in both provinces, and AB’s industry earnings were significantly higher. Between 1998 and 2010, the average diversion rate in AB was 15.1%, and BC’s was 32.9%, which place them on opposing sides of the national average (23.4%). Total operating expenditures were similar in both provinces, yet BC’s waste diversion was more than double AB’s.
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FROLOV, Serhiy, Mariia DYKHA, and Viktoriia DZIUBA. "METHODS OF CORPORATE CAPITAL CAPITAL STRUCTURE OPTIMIZATION." HERALD OF KHMELNYTSKYI NATIONAL UNIVERSITY 298, no. 5 Part 1 (2021): 258–63. http://dx.doi.org/10.31891/2307-5740-2021-298-5(1)-45.
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When forming the optimal capital structure, the choice of methods, approaches, tools is important, which is determined by a set of initial conditions, the need to perform the tasks, achieving results / strategic guidelines. The purpose of the article is to systematize scientific approaches to optimize the capital structure, to clarify the impact of factors on the capital structure of the corporation, which will serve as a basis for ensuring the optimal level of capital structure. As a result of the research, the views of scientists on the optimization of capital structure are systematized, the key aspects of the three main approaches to such optimization are singled out and described. The approaches used in determining financial leverage are described. The expediency of determining financial leverage through the ratio of EPS – earnings per share and EBIT – earnings before interest and taxes is substantiated. The most common methods of capital structure optimization are identified: the method of capital expenditures (the method of minimizing the weighted average cost of capital); the method of determining the effect of financial leverage or the method of maximizing the level of financial profitability; method of determining the complex operational and financial leverage; EBIT-EPS valuation method, Du Pont method, operating profit method and adjusted present value method. Their features, advantages and disadvantages of use are described. The factors influencing financial leverage are systematized, the positive or negative influence of each of the determined factors on financial leverage is determined. A matrix of factors that determine the optimal capital structure in terms of the environment (internal or external) and the implementation of financial policy (at the strategic or operational-tactical levels).
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JEROH, Edirin FCA, Kelvin A. MORDI, and Frank O. EBIAGHAN. "DETERMINANTS OF RESEARCH AND DEVELOPMENT INVESTMENT: A MULTIVARIATE ANALYSIS OF WORKING CAPITAL, RETAINED EARNINGS, EBIT AND VALUE OF EQUITY." GPH-International Journal of Business Management 8, no. 05 (2025): 01–16. https://doi.org/10.5281/zenodo.15574963.
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<em>This study investigated the determinants of Research and Development (R&D) investment among listed non-financial firms in Nigeria, focusing on the roles of Working Capital (WC), Retained Earnings (RE), Earnings Before Interest and Tax (EBIT), and Value of Equity (VOE). Employing an ex-post facto research design, the study analyzed secondary panel data from 55 firms over six years (2018–2023). The panel-corrected regression technique is utilized to examine the relationship between financial variables and R&D expenditure. Results reveal a statistically significant model (Wald χ² = 196.62, p < 0.001) explaining 6.8% of the variation in R&D investment. The findings indicate that WC and EBIT negatively impact R&D investment, suggesting firms with higher liquidity and operating earnings may prefer short-term financial stability over uncertain innovation spending. Conversely, RE and Return on Assets (ROA) positively influence R&D, underscoring the importance of profitability and internal funding in driving innovation activities. VOE exhibits a negative relationship with R&D, reflecting shareholder risk aversion to investment uncertainty. These findings align with prior studies emphasizing the nuanced financial and market factors shaping firms’ innovation strategies. The study concludes that both operational performance and market valuation critically affect R&D investment decisions. It recommends that firms balance liquidity management with long-term innovation goals while encouraging policies that promote reinvestment of earnings into R&D. Enhancing investor confidence through transparency and risk mitigation is also essential to support sustainable innovation and economic growth in Nigeria.</em>
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Singhania, Monica, and Sanjeev Sharma. "Financial turnaround of Indian Railways (B)." Emerald Emerging Markets Case Studies 2, no. 8 (2012): 1–7. http://dx.doi.org/10.1108/20450621211289494.
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Subject area Financial management, strategic management. Study level/applicability The study can be used by business schools, companies/organizations, individuals, students of business management, in the area of financial and strategic management to study and analyse management strategies by a Government organization that has to balance social objectives and commercial viability. Case overview Indian Railways (IR) has mixed operations – passenger and freight – that generate resources for its development expenditure, as well as fully covering its operational costs. This is in sharp contrast to most world railways that depend on a subsidy for operations and development expenditure. While IR would strive to increase earnings through higher throughput levels and generate more funds through its own resources, the constraints of fixed expenditure, largely comprising staff related expenses and fuel costs make it difficult to achieve the target. Operational and safety considerations dictate the need to ensure adequate provision for working expenses. Global developments significantly influenced the Indian economy after 2008-2009 and resulted in moderation in growth compared with the robust growth in preceding years. IR is presently passing through a difficult phase which began with the slowdown in the economy and implementation of the Sixth Pay Commission's recommendations. While earnings continue to grow both in the passenger and goods segments, the expenditure on account of increases in salaries, allowances and pensions has been much higher than after previous Pay Commissions. This case explores this difficult period for IR when there was a major increase in operating expenditure largely due to the implementation of the recommendations of the Sixth Central Pay Commission and because of the global economic slowdown. Expected learning outcomes These include: being able to analyse whether the turnaround phase of IR is over; and discussing the strategies to return IR to the path of growth. Supplementary materials Teaching notes are available; please consult your librarian for access.
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SUWALDIMAN, SUWALDIMAN, and JAMHARI RAMADHAN. "ASSET INSTRUMEN KEUANGAN DAN FREE CASH FLOW TERHADAP NILAI PERUSAHAAN: DIVIDEND PAYOUT RATIO SEBAGAI PEMODERASI." Jurnal Bisnis dan Akuntansi 21, no. 1 (2019): 27–38. http://dx.doi.org/10.34208/jba.v21i1.423.
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This research examines the impact of financial instrument assets and free cash flow on the firm value. This research also tests the dividend payout ratio as the moderating variables. Data sample were taken out of the manufacturing companies listed in BEI for period of 2014 – 2016. Firm value is defined and measured as the share market price five days as the audit report released. Financial instrument assets is defined and measured by the ratio of the total financial assets to the total assets. Meanwhile free cash flow is measured by comparing the operating cash flows less by capital expenditure to the operating cash flow. Finally, dividend payout is measured by the ratio of dividend per share to the earnings per share. Regression analysis is employed to test relationship among those variables. This research reveals that the financial instrument assets have a positive and significant impact on the firm value. However, this research does not prove that the free cash flow has a positive and significant impact on the firm value. Moreover, the dividend payout ratio strengthens the impact of financial instrument assets on the firm value, but not the free cash flow. It can be concluded that market will respond positively to the information of increasing in the financial instrument assets. And the increasing in the dividend payout ratio will strengthen to the relationship. In contrast, free cash flow is not significantly responded by the market and either the dividend payout ratio.
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Bansal, Manish, Asgar Ali, and Bhawna Choudhary. "Real earnings management and stock returns: moderating role of cross-sectional effects." Asian Journal of Accounting Research 6, no. 3 (2021): 266–80. http://dx.doi.org/10.1108/ajar-11-2020-0107.
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PurposeThe study aims at investigating the impact of real earnings management (REM) on the cross-sectional stock return after considering the moderating role of market effect, size effect, value effect and momentum effect.Design/methodology/approachThe study uses weekly and monthly data of 3,085 Bombay Stock Exchange listed stocks spanning over twenty years, from January 2000 to December 2019. REM is measured through metrics developed by Roychowdhury (2006), namely, abnormal levels of operating cash flows, production costs and discretionary expenditure. The study employs univariate and bivariate portfolio-level analysis.FindingsThe findings deduced from the empirical results demonstrate that investors perceive downward REM as an element of risk; hence, they discount the stock prices at a higher rate. On the contrary, results show that investors positively perceive upward REM; hence, they hold the stocks even at a lower rate of return. This anomaly is found to be robust for all kinds of considered moderations.Practical implicationsThe findings have important managerial implications as investors are found to assign different weights to different forms of REM, depending upon the perception regarding the magnitude of risk involved in different forms. Managers can accommodate this information during their short- and long-term corporate planning.Originality/valueFirst, the study is among the earlier attempts to examine the association between REM and stock returns by considering the moderating role of cross-sectional effects. Second, the study considers the direction and endogenous nature of REM while investigating the issue.
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Suharman, Eko Febri Lusiono, U. Ari Alrizwan, Yuliansyah, and Munandar. "Analisis Laporan dan Kinerja Keuangan Pemerintah Daerah Kabupaten Sambas." Jurnal Alwatzikhoebillah : Kajian Islam, Pendidikan, Ekonomi, Humaniora 10, no. 2 (2024): 297–306. http://dx.doi.org/10.37567/alwatzikhoebillah.v10i2.2515.
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This research aims to analyze the financial performance of the Sambas Regency Regional Government for 5 years from 2017 to 2021 and test whether there are differences in the performance of the degree of decentralization, performance of regional financial independence, performance of operating expenditures, and performance of capital expenditures. The analytical tools used are financial ratios, namely liquidity ratios, leverage ratios, debt ratios, productivity ratios and operating ratios. The research uses quantitative descriptive data analysis methods. The research results show that the liquidity ratio which consists of the average current ratio is 0.82, meaning that every Rp. 1,- of current debt is guaranteed by Rp. 0.82,- of current assets; The average cash ratio is 0.35, meaning that for every Rp. 1,- of current assets, Rp. 0.35 is cash and cash equivalents; the average cash to current liabilities is 0.29, meaning the regional government's ability to immediately pay every Rp. 1.- of current debt using cash and cash equivalents is Rp. 0.29,-; The average Quick Ratio is 0.60, meaning that the local government's ability to fulfill its short-term obligations for every Rp. 1,- using cash, cash equivalents and receivables is Rp. 0.60,-; The average cash flow ratio is 2.31, meaning the ability of a Regional Government's operating cash flow to pay for every Rp. 1,- of current debt owned using operating cash of Rp. 2.31,-. The leverage ratio measured is the Short Term Debt to Long Term Debt Ratio of 1.00. The debt ratio measured is the Total Liabilities to Current Assets Ratio. The average is 1.24 and the average Current Liabilities to Total Asset Ratio is 0.05, meaning that for every R.1,- debt is guaranteed by total assets of Rp.0.05,- The productivity ratio measured is Current Assets to Total Assets Ratio . The average is 0.04, meaning that for every Rp. 1,- current assets used for operational activities is Rp. 0.04,- Quick Asset to Inventory Ratio, the average is 2.67. The operating ratios measured include the average Earning Power of Total Investment of 0.10. The average financial independence ratio is 0.11 or 11%. From the aspect of relationship patterns and level of capability, the region is in the very low category with an instructive relationship pattern. The Public Participation Level Ratio is 0.07. This ratio shows the level of public participation in paying taxes, in this case all regional tax revenues, tax revenue sharing, both central and provincial. The higher the ratio value of the level of public participation of a Regional Government, the better it will be. From the calculation results it can be seen that for every Rp. 1,- Revenue, which comes from taxes is Rp. 0.07,- Debt Service Coverage Ratio (DSCR) for the Regional Government of Sambas Regency, the average for 2017-2021 is 2.79 or still above the minimum requirement of 2.5 as regulated in PP No. 107 of 2000 concerning Regional Loans article 6 letter b. However, in 2020 the DSCR was 2.35 and in 2021 it was 1.79, which is below the minimum requirements as regulated in PP 107/2000. This condition is caused by the relatively increasing number of regional loans from year to year. So the regional government for the coming year must ensure that the DSCR is still at the minimum limit outlined by the central government because if loans continue to increase there will be concerns that the Sambas Regency Regional Government will not be able to meet mandatory spending as regulated by PP 30/2011 concerning regional loans explanation of article 15 paragraph (1) letter b.
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Kumar, B. Rajesh, and K. S. Sujit. "Determinants of Value Creation in Oil and Gas Firms: A Firm-Specific Comparative Study Using Panel Data." Applied Economics Quarterly: Volume 65, Issue 1 65, no. 1 (2019): 45–69. http://dx.doi.org/10.3790/aeq.65.1.45.
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Abstract This study examines the role of firm-level financial and operational characteristics in explaining the market valuation of oil and gas-based energy companies. Using panel data based on 82 major oil companies, the study explores the value drivers involved in value creation of integrated and independent oil companies. In other words, the study explores the impact of investment, financing, and dividend decisions on value creation in energy firms. The results suggest that stock market is skeptical about the risky capital expenditures undertaken by oil and gas firms. The study finds some evidence for signaling theory of debt financing, which suggests that the use of higher debt by energy companies is viewed positively by markets. Higher dividend payment is viewed negatively by markets. The enterprise value variable EVEBITA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is positively related to share price with statistical significance. Higher profitability of oil firms leads to greater value creation for oil and gas-based firms. The higher the liquidity position, the greater the value enhancement of oil and gas firms would be. The study finds some evidence for the positive association of operating characteristics with market valuation of oil-based energy firms. Higher reserve replacement leads to higher valuation and is viewed positively by market analysts. This study aims to provide new insights into how financial and operational information relates to the market valuation of both independent and integrated oil companies. The identification of factors for value creation in stock market is critical for the design of effective policies for wealth creation. JEL classifications: G30, G31 Keywords: Market Valuation, Profitability, Reserve Replacement, Integrated Oil Companies
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Chmielewski, Wojciech. "Impact of ICT Sector Research and De velopment Expenditure on the Market Capitalization in the US, the EU and China." Studia i Materiały Wydziału Zarządzania UW 2023, no. 2 (2023): 58–69. http://dx.doi.org/10.7172/1733-9758.2023.39.4.
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Purpose: Due to the growing global role of enterprises from the information and communication technology sector from the leading regions of the USA, EU and China in the industry, the author’s research goal was to try to identify factors influencing the value of listed enterprises understood as its stock exchange capitalization. For the purpose, research was carried out on the impact of a group of twenty-six variables on the company’s market capitalization, among which the most important conclusions concern the impact of seven variables, i.e. revenues, research and development expenses, earnings before interest, taxes, depreciation and amortization (EBITDA), earnings before interest and taxes (EBIT), total equity, total assets, total revenues and dividend rate. Design/Methodology/Approach: The study used research methods in the form of a random effects model and a fixed effects model, and then used the Hausmann test to verify which of the models is better suited to establishing the relationship between the selected independent variables and the dependent variable in the form of the stock market capitalization of companies from the ICT sector. Findings: It was found that the impact of equity or the level of revenues on market capitalization is much smaller than in the case of research and development expenses and that the issue of depreciation of assets is an important factor in the market valuation of enterprises from the ICT sector. Additionally, the level of assets and equity has, although limited, impact on the market valuation of the company, regardless of the region in which an entity operates. Revenues are important from a regionalization perspective – company’s market capitalization is the largest in the case of the ICT services subsector in China. There is no similar relationship among manufacturers of ICT devices operating in all three regions. Research limitations/Implications: Due to the fact that the COVID-19 pandemic and the global economic slowdown are important factors affecting the ICT sector, further research on the value of ICT enterprises should take the aspects into account.
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Aror Tina A and Mupa Munashe Naphtali. "WorldCom and the collapse of ethics: A case study in accounting fraud and corporate governance failure." World Journal of Advanced Research and Reviews 26, no. 2 (2025): 3773–85. https://doi.org/10.30574/wjarr.2025.26.2.1632.
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WorldCom fraud case is a good example of corporate malfeasance and delinquency of governance and controls. WorldCom was one of the world's largest telecommunication companies facing the biggest scandal of earning manipulation, where it was alleged to have inflated its earnings by more than $11 billion. The top management, Bernie Ebbers, the chief executive officer, and Scott Sullivan, the chief financial officer, conducted this fraud through manipulations such as identifying operating expenses as capital expenditure and fiddling with bad debt provisions. This fraud was first masked through financial scheming that deceived investors, regulators, and auditors. The scandal's essence here was lax corporate governance, which was based on business management goals oriented and driven solely by the excessive growth of corporate profits and stock price without regard to the legal concerns and the shareholders' interest. The acquisition policy that the Company adopted, together with the high tendency to meet financial goals that could easily be described as unsavory, made it easy for executives and employees of the Company to indulge in unethical financial practices (Eliel et al., 2025). They contributed significantly to such fraud, which took place unnoticed for years. This includes the Board of directors and the external auditors. The other party that became a subject of discussion was the auditors, namely Arthur Andersen, who lacked skepticism in handling their duty and could not detect fraud in the accounting department. The impact of the WorldCom scandal also manifested itself in organizational repercussions, which made WorldCom bankrupt, as well as the changes at the legislative level that occurred after the scandal, the Sarbanes-Oxley Act. They should not forget internal controls, ethical approaches, and professional standards in fighting and preventing fraud in financial organizations. It also raises the issue of outdated audit practices and the absence of adequate measures for organizations that can help prevent embezzlement before losses accumulate. The features associated with the WorldCom case clearly illustrate that corporate fraud is a reality in business and that ethics plays a critical function in any business.
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Boyar, Lee B., and Paquita Davis-Friday. "Assessing a golden opportunity: CEO performance at McDonald’s." CASE Journal 15, no. 5 (2019): 397–415. http://dx.doi.org/10.1108/tcj-12-2017-0118.
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Theoretical basis Financial accounting to assess stewardship: the case requires students to evaluate Thompson’s stewardship of McDonald’s, in part based on the company’s financial accounting information. Financial reporting performs an important societal role by helping control agency problems that arise from the separation of ownership and management. Since external stakeholders cannot “observe directly the extent and quality of managerial effort on their behalf […] the manager may be tempted to shirk […] blaming any deterioration of firm performance on factors beyond his/her control” (Scott, 2014, p. 23). However, although financial reporting helps hold managers accountable to shareholders, accounting information is not fully informative about managerial effort. For example, while net income provides useful information regarding the CEO’s stewardship, it is also “noisy,” due to recognition lags and other factors (Scott, 2014, p. 364). Efforts undertaken by Thompson in a particular period, such as marketing expenditures, might reduce current earnings, yet boost future profitability. Additionally, Thompson’s predecessor’s past efforts might have positive or negative effects on current earnings. Evaluating stewardship effectively involves considerable judgment, in addition to knowledge of financial accounting. The implication of poor firm performance is that the CEO is ineffective at formulating and implementing strategies and policies to enhance firm value (Dikolli et al., 2014). Specifically, it appears that missing earnings benchmarks matter more for relatively inexperienced CEOs. Don Thompson’s tenure of 33 months at McDonalds is 42 percent lower than median CEO tenure documented in academic research, where the median tenure of chief executives documented in large sample empirical studies is about 57 months (Dikolli et al., 2014). The evidence suggests that the longer a CEO serves, the less likely he is to be dismissed for performance-related reasons. This appears to be the result of the resolution of uncertainty about CEO’s ability and leads to subsequent declines in the level of monitoring by the Board of Directors. Performance evaluation and bias: a significant body of research explores the extent to which female managers are assessed differently than their male counterparts (Powell and Butterfield, 2002). For example, female CEOs face more threats from activist investors than male CEOs. Therefore, even after women achieve the highest managerial rank, they experience more professional challenges than their male counterparts (Gupta et al., 2018). However, the question of whether black CEOs are assessed differently is more challenging to answer empirically as a result of a smaller sample size (only one percent of S&P 500 companies are run by black CEOs). Our case attempts to develop the inference that if female CEOs are subject to bias, analogous forces are likely at work when black CEOs are assessed. Recent evidence further suggests that business students sometimes demonstrate bias in making assessments (Mengel et al., 2018). The authors discuss these findings – as well as strategies for including them in the case discussion – in the “Teaching Strategy” section herein below. Research methodology The case was written from the public record surrounding the appointment of Don Thompson and McDonald’s company filings. The record includes articles from The New York Times and The Wall Street Journal, as well as local and industry publications. Case overview/synopsis The case examines the role of financial accounting in evaluating CEO performance in the context of the appointment of McDonald’s first African-American chief executive and his subsequent two-and-a-half years on the job. The case deepens students’ understanding of the link between financial reporting and stewardship, while highlighting the subjectivity inherent in assessing managerial performance, particularly over relatively short time periods. As students analyze the case, they must consider the extent to which a firm’s results are attributable to luck vs skill. We use “skill” to refer to CEO effort and other controllable factors, while “luck” refers to exogenous factors, such as macroeconomic conditions. Assessing stewardship is of practical significance. It allows pay to be better aligned with performance and empowers stakeholders to identify when a change of leadership may be warranted. The case may also be used to spur reflection, in an applied context, on the importance of being alert to unconscious bias, even when evaluating seemingly objective financial reporting data. Recent research, discussed herein, suggests that business students sometimes exhibit bias when making assessments. Complexity academic level The case should be included in discussions of corporate governance, executive compensation and the role of accounting information in efficient contracting. It is appropriate in intermediate financial accounting courses for undergraduates, introductory graduate accounting courses, or other courses with an element of financial statement analysis. Standard introductory accounting textbooks offer helpful supplementary reading for students. Horngren et al.’s (2014) book, Introduction to Financial Accounting (12th ed.), Pearson, London, provides an overview of the income statement and its role in assessing performance (see Chapter 2) as well as a useful discussion on evaluating the components and trends of a business (see Chapter 12). More advanced students may benefit from the in-depth discussion of earnings quality, operating income and non-operating income found in Chapter 4 of Intermediate Accounting (9th ed.), McGraw Hill Education, New York by Spiceland et al. (2018).
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Bao, Dapeng. "Research on the Upgrading and Development of Ski Industry in Heilongjiang Province under the Opportunity of 2022 Beijing Winter Olympic Games." Journal of Theory and Practice of Management Science 4, no. 05 (2024): 21–27. http://dx.doi.org/10.53469/jtpms.2024.04(05).03.
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At present, there are two bottlenecks in the development of skiing industry in Heilongjiang Province, that is, the total number of customers has not broken through for a long time, and it is in a downward trend; the number of users of each skiing enterprise is very thin, which can not support the operating expenditure, which shows that the sustainability of the development of skiing industry in Heilongjiang Province is greatly weakened, and how to improve the sustainability of development is a problem worthy of attention of skiing enterprises. At this time, the emergence of the Beijing Winter Olympic Games has given Heilongjiang Province ski industry the direction to break through the bottleneck and improve the development sustainability. Ski enterprises can use the appeal and audience groups of the Beijing Winter Olympic Games to achieve their goals. This paper will analyze this and elaborate the ways and strategies to achieve the goals. Selecting Chinese A-share listed companies from 2011 to 2019 as research samples, this paper empirically tests that the higher the development of the regional digital economy, the lower the synchronization of corporate stock prices. The same conclusion is obtained after the robustness test. The mediation effect test shows that the digital economy reduces stock price synchronization by inhibiting real earnings management. Further research proves that the digital economy has more significant synchronization with enterprise stock prices in non-state-owned enterprises with close attention paid by analysts. The research conclusion has important enlightenment for listed companies, regulatory authorities, and investors.
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Mostafa, Wael. "The impact of earnings management on the value relevance of earnings." Managerial Auditing Journal 32, no. 1 (2017): 50–74. http://dx.doi.org/10.1108/maj-01-2016-1304.
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Purpose This paper aims to examine the association between earnings management and the value relevance of earnings (the latter is operationalized by earnings response coefficient). Specifically, this study examines whether opportunistic earnings management has a negative impact on the value relevance of earnings for a sample of firms listed on the Egyptian Stock Exchange. Design/methodology/approach Different from prior work and due to data limitations in the Egyptian market, this paper first examines for the existence of earnings management based on the whole operating performances of the firms by testing whether firms with low/poor operating performance are more likely to choose income-increasing actions (strategies) than firms with high operating performance. After confirming that low operating performance firms manage earnings upward, the authors then assess whether this opportunistic earnings management by these low operating performance firms reduces the value relevance of earnings. This is performed by estimating a model of the relationship between stock returns and accounting earnings with a dummy variable that allows parameter shifts for earnings of low operating performance firms. Findings The results show that discretionary accruals are positive and significantly higher for firms with low operating performance than those for firms with high operating performance. These results indicate that low operating performance firms increase the earnings management practices by probably increasing their reported earnings opportunistically to mask their low performance. Furthermore, the results show that the earnings response coefficient is significantly smaller for earnings of low operating performance firms than that for earnings of high operating performance firms. These results suggest that earnings of firms with low operating performance (that are engaged in opportunistic earnings management strategies) have less value relevance than earnings of firms with high operating performance, i.e. the informativeness of managed earnings is lower than that of non-managed earnings. Practical implications Based on these results, it is plausible that the presence of opportunistic earnings management adversely affects the value relevance of accounting earnings. Originality/value Consistent with previous results from developed countries, this study shows that earnings management is a significant factor that affects value relevance of earnings in Egypt.
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Triani, Neks, and Ahmad Abbas. "The Effect of Magnitude of Operating Cash Flow and Accrual Earnings on the Level of Earnings Persistence." Gorontalo Accounting Journal 6, no. 2 (2023): 283. http://dx.doi.org/10.32662/gaj.v6i2.2743.
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This research aims to disclose the magnitude of operating cash flow and accrual earnings in affecting the level of earnings persistence. The sample of this research was manufacturing firms listed in Indonesia Stock Exchanges. The nexus between variables was tested using random effect model. This research demonstrated that the magnitude value of manufacturing firms is positive on average in the accrual earnings, operating cash flow, and earnings persistence. The result of testing the effect points out that accrual earnings and operating cash flow affect the earnings persistence positively. The level of the earnings persistence has been followed by the magnitude of accrual earnings and operating cash flow indicating that the higher the accrual earnings and operating cash flow, the more persistent the earnings gained by manufacturing firms.
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Lee, Kyu-Jin. "The Relation of Operating Earnings Persistence and the Accuracy of Management Operating Earnings Forecast." Tax Accounting Research ll, no. 30 (2011): 1–17. http://dx.doi.org/10.35349/tar.2011..30.001.
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Nugroho, Felicianus Adi, and Dewi Ratnaningsih. "PENGARUH REAL EARNING MANAGEMENT TERHADAP ARUS KAS OPERASI PERUSAHAAN DENGAN KUALITAS AUDIT SEBAGAI VARIABEL MODERASI (Studi pada Perusahaan Manufaktur yang Terdaftar di BEI)." MODUS 27, no. 1 (2016): 65. http://dx.doi.org/10.24002/modus.v27i1.569.
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This study aims to determine the efect of real earnings management which is a proxy of earnings management to the predictive ability of fnancial reports through the company’s operating cash fow. Researchers also consider the infuence exerted by the quality of audits of the relationship between real earnings management with the company’s operating cash fow. Samples are manufacturing companies listed in Indonesia Stock Exchange during the period of observation 2010-2012.Berdasarkan criteria previously set contained 249 corporate data used in this study. The results of this study revealed that real earnings management has an infuence on the predictive ability of fnancial statements through operating cash fow. Quality audits can also afect earnings management actions undertaken by the company and consequently also of the operating cash fow of the company. Overall audit quality may afect the actions of earnings management and certainly also the predictive ability of corporate fnancial statements.Keywords: real earnings management, operating cash fow, and audit quality.
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Caylor, Marcus L., and Scott Whisenant. "Depreciation Choice and Future Operating Performance." International Journal of Accounting and Financial Reporting 9, no. 1 (2019): 89. http://dx.doi.org/10.5296/ijafr.v9i1.13997.
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In this study we test the argument that information asymmetry and the problems of adverse selection provide incentives for managers to use accounting choices to signal relatively higher future prospects. Specifically, we contend that firms use accelerated depreciation to credibly signal higher future earnings and cash flows, consistent with signaling theory. Compared to straight-line depreciation, accelerated depreciation reduces earnings in the earlier years of asset lives and produces more variability in earnings. Despite these drawbacks, hundreds of firms voluntarily use accelerated depreciation for at least some of their depreciable assets. Our results indicate that the use of accelerated depreciation foreshadows higher future earnings and cash flows for horizons of one, two, and three years ahead.
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Abualrob, Laith Abdel Rahman, and Sanaa N. Maswadeh. "The Effect of Financial Ratios Derived From Operating Cash Flows on Jordanian Commercial Banks Earnings per Share." International Journal of Financial Research 11, no. 1 (2019): 394. http://dx.doi.org/10.5430/ijfr.v11n1p394.
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This study tries to investigate the effect of operating cash flows ratios, which are (operating cash flows attributed to net income, operating cash flows attributed to credit facilities, and operating cash flows attributed to deposits) on earnings per share. The study was applied on Jordanian commercial banks listed on the Amman Stock Exchange during the period (2013-2017), and multiple regression analysis was used to test the study hypotheses.The most important results revealed by the study were: the ratio of operating cash flows attributed to credit facilities is considered as the most important ratio derived from the cash flow statement helping in determining the earnings per share in Jordanian commercial banks. And there is a statistically significant effect of operating cash flows attributed to net income, operating cash flows attributed to credit facilities, and operating cash flows attributed to deposit on earnings per share in Jordanian commercial banks.
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Osesoga, Maria Stefani, Rosita Suryaningsih, and Febryanti Simon. "Real Earnings Management, Firm Performance, and Corporate Governance Mechanism." Conference Series 3, no. 2 (2021): 39–49. http://dx.doi.org/10.34306/conferenceseries.v3i2.576.
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The purpose of this study is to analyze the impact of real earnings management on firm performance and the impact of corporate governance as an intervening variable in the relationship between real earnings management and firm performance. The object are companies include in Corporate Governance Perception Index during 2015-2019 and listed in Indonesia Stock Exchange (IDX) and analyzed by using path analysis method. 
 Real earnings management has a significant effect on the firm performance. Furthermore, with corporate governance mechanism within the company, real earnings management significantly affect firm performance. This research is meaningful, but has limitations. The result cannot be generalizing because the sample only companies that listed in CGPI and IDX period 2015-2019. The research implication are as follows: top level management should be cautious about credit policy, cash flow from operation, discretionary expenditures, and production. 
 Earnings management is one of variable that the most prevalent in recent studies but the proxy for earnings management in the recent studies used discretionary accrual. In this research, real earnings management is used to indicate earnings management which measured by abnormal cash flow from operation. Thus, it may provide some contribution to the literature.
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Kwang-Bok Hue. "The Study of Earnings Management to Avoid Earnings Losses with Operating Cash Flows and Operating Incomes." Global Business Administration Review 6, no. 2 (2009): 125–41. http://dx.doi.org/10.17092/jibr.2009.6.2.125.
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Hua, Nan, Arthur Huang, Marcos Medeiros, and Agnes DeFranco. "The moderating effect of operator type: the impact of information technology (IT) expenditures on hotels’ operating performance." International Journal of Contemporary Hospitality Management 32, no. 8 (2020): 2519–41. http://dx.doi.org/10.1108/ijchm-09-2019-0753.
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Purpose This study aims to examine how operator type moderates the relationship between hotel information technology (IT) expenditures and operating performance. Design/methodology/approach By adapting and extending O’Neill et al.’s (2008) and Hua et al.’s (2015) research, this study constructed an empirical model and tested proposed hypotheses, with Newey and West (1994) errors computed to accommodate potential heteroscedasticity and autocorrelation issues. Findings Operator type moderates the impact of hotel IT expenditures on operating performance. In particular, it appears that the operator type of franchising exerts a stronger moderating effect compared with other operator types explored. Practical implications This study, as the first of its kind, shows that the choice of operator type shapes how a hotel can effectively use IT expenditures to improve operating performance. This finding can be beneficial for hotel owners when making operator type decisions. In addition, operator type moderates the direct impact of IT expenditures on revenues and gross operating income. This study’s results show that franchised hotels seem to use IT expenditures more effectively compared with independently owned hotels. Originality/value This study contributes both theoretically and practically to understand how operator type moderates the relationship between IT expenditures and hotel performance. The research outcome provides a more holistic view that governs the relationships between IT expenditures, operator type and operating performance.
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Susanto Salim, Callista,. "Faktor Yang Mempengaruhi Earnings Persistence Pada Perusahaan Manufaktur Yang Terdaftar Di BEI." Jurnal Paradigma Akuntansi 4, no. 1 (2022): 91. http://dx.doi.org/10.24912/jpa.v4i1.17019.
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The purpose of this study is to identify the effect of operating cash flow, firm size, operating cycle, and sales volatility towards earnings persistence in manufacturing companies listed in Indonesia Stock Exchange in the year of 2017 – 2019. This study used 249 data from manufacturing companies that have been selected using purposive sampling method. This research used Statistical Product and Service Solution (SPSS) for windows version 21 to process the data. The result of research shows that operating cash flow and operating cycle has negative significant influence towards earnings persistence, while firm size and sales volatility has no significant influence towards earnings persistence. The implication of this study is the need to increase company’s earnings which will bring a good signal for investors.
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Anida Zuhrotul Laili and Sugeng Hariadi. "UJI BEDA PENGARUH ARUS KAS OPERASI DAN TINGKAT HUTANG TERHADAP PERSISTENSI LABA PERUSAHAAN FOOD AND BAVERAGE DI BEI DAN BURSA EFEK FILIPINA." Jurnal Penelitian Ekonomi Akuntansi (JENSI) 5, no. 1 (2021): 1–13. http://dx.doi.org/10.33059/jensi.v5i1.3761.
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This study aims to analyze and obtain empirical evidence of the difference in the influence of operating cash flow and debt levels on earnings persistence in 2017-2019. The dependent variable of this study is earnings persistence, while the independent variable of this study consists of operating cash flow and debt levels. The population of this study is the food and beverage sub-sector manufacturing companies in the Indonesia Stock Exchange and the Philippines Stock Exchange. The sample selection was done by using purposive sampling technique and resulted 81 samples. The data analysis technique in this research is using descriptive statistical analysis, classical assumption test and hypothesis The classical assumption test includes normality test, multicollinearity test, heteroscedicity test and autocorrelation test. While the hypothesis test includes multiple linear regression analysis, partial test (t test) and difference test. The results of the hypothesis test show that the operating cash flow of companies on the IDX has a significant effect on earnings persistence, while the level of debt has no significant effect on earnings persistence. Companies in the Philippine Stock Exchange show that operating cash flow and debt levels have no significant effect on earnings persistence. Operating cash flow and debt levels show a negative effect on earnings persistence. In addition, the different test shows that there is a difference in the magnitude of the influence of operating cash flow and debt levels on earnings persistence in companies on the IDX and the Philippine Stock Exchange.
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Takhtaei, Nasrollah, and Hassan Karimi. "The Effect of Firm Size on Predictability Future Cash Flows Using Earnings and Operating Cash Flows." Asian Journal of Finance & Accounting 9, no. 1 (2017): 90. http://dx.doi.org/10.5296/ajfa.v9i1.10795.
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The aim of this research is to investigate earnings relative ability, operating cash flow, and two traditional criteria of cash flow, that is, net earnings plus depreciation and operating working capital in predicting operating future cash flows. Further, the effect of firm size on the ability to predict these criteria is investigated in this research. The sample firms contain listed companies in Tehran Stock Exchange (TSE) over the period 2005-2009. The results show that net earnings relative to operating cash flows and its traditional criteria have greater ability to predict future cash flows in small firms whereas operating cash flows compared with other criteria are better predictors in big firms. Results indicate thatthe predictability of all models increases considerably when firm size increases.
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Purwatiningsih, Purwatiningsih, Endah Finatariani, and Widiyanti Rahayu BA. "PENGARUH ARUS KAS OPERASI DAN VOLATILITAS PENJUALAN TERHADAP PERSISTENSI LABA PADA PERUSAHAAN PROPERTY DAN REAL ESTATE YANG TERDAFTAR DI BURSA EFEK INDONESIA TAHUN 2016 - 2020." SCIENTIFIC JOURNAL OF REFLECTION : Economic, Accounting, Management and Business 5, no. 3 (2022): 535–43. http://dx.doi.org/10.37481/sjr.v5i3.506.
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This study aims to determine the operating cash flow and sales volatility variables on earnings persistence. The purpose of this study is to determine how much influence operating cash flow and sales volatility have on earnings persistence in Property and Real Estate companies listed on the Indonesia Stock Exchange 2016-2020. This type of research is quantitative. The data analysis technique used is panel data regression with a time series of 6 (six) years, namely the 2016-2020 period and 20 (twenty) companies according to the criteria. From the results of simultaneous hypothesis testing (F test) operating cash flow and sales volatility simultaneously have a significant effect on the earnings persistence variable. Based on the results of the partial test (t test) operating cash flow has a positive and significant effect on earnings persistence, while sales volatility has no significant effect on earnings persistence.
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Liandu, Hari, Mohamad Adam, Marlina Widiyanti, and Isnurhadi Isnurhadi. "effect of operating cash flow and profit management on company's profitability and growth." International journal of business, economics & management 6, no. 3 (2023): 247–54. http://dx.doi.org/10.21744/ijbem.v6n3.2170.
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This study aims to determine the effect of operating cash flow on profitability and the effect of earnings management on corporate growth. Operating cash flow is measured by the growth of operating cash flow, while profitability is measured by return on assets (ROA). Earnings management is measured through discretionary accruals, and growth is measured through asset growth. Research conducted at PT. Baturaja Multi Usaha with a monthly research period from 2019-2021. The research uses quantitative methods, simple linear regression data analysis techniques, and hypothesis testing. The results showed that operating cash flow had a positive and significant effect on profitability (ROA), while earnings management significantly affected company growth.
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Murdoch, Brock, and Paul Krause. "The Decline In Matching And Earnings Ability To Forecast Operating Cash Flows." Journal of Applied Business Research (JABR) 28, no. 4 (2012): 701. http://dx.doi.org/10.19030/jabr.v28i4.7053.
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Recent research has documented the decline of matching in financial reporting during the last few decades. The FASB has argued that earnings should provide investors and creditors with an ability to assess the amounts, timing, and uncertainty of cash flows to the organization (1978). This research investigates whether the decline in matching has affected the ability of earnings to forecast operating cash flows. Results indicate that earnings from earlier periods in which matching was better can be used to make more accurate predictions of operating cash flows than can earnings from later periods with poorer matching. Additionally, the more frequent recognition of special items in later periods also damages the ability of earnings to predict operating cash flows.
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Veronika and Herlin Tundjung Setijaningsih. "Pengaruh Akrual, Leverage, Dan Arus Kas Operasi Terhadap Persistensi Laba Dengan Book Tax Differences Sebagai Variabel Moderasi." Jurnal Ekonomi 27, no. 03 (2022): 139–58. http://dx.doi.org/10.24912/je.v27i03.870.
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This research aims to analyze the effect of accruals, leverage, and operating cash on earnings persistence by using the book tax difference as moderation in manufacturing companies listed on the Indonesia Stock Exchange during 2018-2020. The sample was selected by purposive sampling method as many as 40 companies with a total of 120 data for three years. The data technique uses multiple regression analysis and is processed with Eviews 12.0 and Microsoft Excel 2013. The results of this study indicate that: 1) Accruals, leverage, and operating cash flow have significant effect on earnings persistence; 2) The difference in book tax does not strengthen the effect of accruals, leverage, and operating cash flows on earnings persistence; 3) The difference in book tax does strengthen the effect of operating cash flows on earnings persistence.
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Stevanović, Slavica, Jelena Minović, and Grozdana Marinković. "Earnings and cash flow persistence: Case of medium agriculture enterprises in Serbia." Ekonomika poljoprivrede 68, no. 1 (2021): 141–53. http://dx.doi.org/10.5937/ekopolj2101141s.
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This paper examines the earnings and cash flow persistence of selected agriculture Serbian enterprises as a measure of their earnings quality. We study the persistence of income statements and cash flow statement items of medium-sized agriculture enterprises in Serbia. Agriculture is a relevant sector for the national economy and medium-sized enterprises are the main drivers of her economic growth. We use panel regression analysis with annual data over the period from 2010 to 2018. The results of our research indicate that earnings and cash flow-based indicators have different persistence. Analysing accruals and net cash flows of operating activities as determinants of operating profit of analysed enterprises, we conclude that operating profit that represents accruals are more persistent than operating profit backed by net operating cash flows.