Earnings Management The Influence Of Real And Accrual Based Earnings Management On Earnings Quality
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Earnings Management The Influence Of Real And Accrual Based Earnings Management On Earnings Quality
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Author :
language : en
Publisher: GRIN Verlag
Release Date : 2024-01-31
Earnings Management The Influence Of Real And Accrual Based Earnings Management On Earnings Quality written by and has been published by GRIN Verlag this book supported file pdf, txt, epub, kindle and other format this book has been release on 2024-01-31 with Business & Economics categories.
Master's Thesis from the year 2019 in the subject Business economics - Accounting and Taxes, University of Duisburg-Essen, course: Master Thesis, language: English, abstract: This paper delves into various theories and approaches, aiming to define and differentiate earnings management from related concepts such as fraud, expectation management, and impression management. It explores the goals and incentives driving earnings management, including maximizing or minimizing earnings, beating targets, and smoothing. At the onset of the new millennium, corporate scandals rocked the business world, eroding trust in management, boards of directors, and the accounting profession. In response, regulations and policies aimed at enhancing corporate governance and financial reporting were swiftly implemented. The credibility, clarity, and consistency of financial reporting practices play a pivotal role in enabling investors to make informed decisions. Accurate and fair financial performance representations, as opposed to inflated and misleading figures, are essential for market players, including shareholders and creditors. Investors rely on audited financial reports to guide their investment decisions, underscoring the critical importance of accuracy and reliability in publicly available financial disclosures. Auditors, by reducing the risk of material misstatement, ensure the integrity of the information disclosed in a company's financial statements. Management, with the goal of achieving promised targets and ensuring the company's existence, may engage in earnings management as a strategic contribution to corporate policy. Financial reporting serves as a means to distinguish well-performing companies from their counterparts, facilitating efficient resource allocation and empowering stakeholders to make effective decisions. The disclosed earnings results significantly impact a firm's overall business activities and management decisions, particularly in satisfying analysts' expectations, which can influence equity value. While accounting standards play a role, the quality of financial statements is more influenced by company-specific and institutional factors shaping managers' incentives. These factors lead to financial reporting practices being viewed as the outcome of a cost-benefit assessment.
Evidence On The Tradeoff Between Real Manipulation And Accrual Manipulation To 25 Pages 26 To 50 Pages 51 To 75 Pages 76 To 100 Pages 101 To 120
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Author : Amy Yunzhi Zang
language : en
Publisher: ProQuest
Release Date : 2000
Evidence On The Tradeoff Between Real Manipulation And Accrual Manipulation To 25 Pages 26 To 50 Pages 51 To 75 Pages 76 To 100 Pages 101 To 120 written by Amy Yunzhi Zang and has been published by ProQuest this book supported file pdf, txt, epub, kindle and other format this book has been release on 2000 with categories.
The Effect Of Accrual Quality Real Activities Earnings Management And Corporate Governance On Credit Ratings
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Author : Matthew Geiszler
language : en
Publisher:
Release Date : 2014
The Effect Of Accrual Quality Real Activities Earnings Management And Corporate Governance On Credit Ratings written by Matthew Geiszler and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with Corporate governance categories.
One of the most fundamental questions in accounting research is how do different market participants interpret and use the information provided by accountants. Credit rating agencies are major users of financial statements that generate contemporary attention in the accounting literature. As noted by Standard and Poor's, accounting information is a critical element of the credit rating process. In addition, the recent credit crisis has generated increased scrutiny of the credit rating process and the ratings agencies. These issues motivate this study, which examines the effect of accrual quality, real activities earnings management, and corporate governance on credit ratings. The effects of the Credit Rating Agency Reform Act of 2006 (CRARA) and the Dodd-Frank Act (DFA) of 2010 on these associations are also examined. Following the established practice in the literature, accrual (earnings quality) models are used as proxies for the level of accrual quality. Specifically, the modified Jones model (Dechow, Sloan, and Sweeney 1995), the Dechow and Dichev cash flow model (Dechow and Dichev 2002), and Stubben's discretionary revenue model (Stubben 2010) are utilized. Real activities earnings management is measured based on variables used by Roychowdhury (2006) and Cohen and Zarowin (2010). Finally, this study measures corporate governance using the variables outlined in Byard, Li, and Weintrop (2006) and Bebchuk, Cohen, and Ferrell (2009). The results demonstrate that accrual quality is a significant factor in the rating of firms. Firms with lower accrual quality receive lower credit ratings. Real activities earnings management and a firm's level of corporate governance also determine the rating of a firm. Specifically, the results indicate that real activities earnings management related to discretionary expenses (SG&A, advertising, and R&D) are positively associated with ratings. Real activities earnings management related to abnormal production is negatively associated with ratings. Board size, board independence, and the CEO serving as the chairman of the board are positively associated with credit ratings. The relationship between accrual quality and credit ratings decreases in the post CRARA period, which surprisingly may indicate lower reliance on accounting information by the rating agencies during the recent economic recession. Determining the effect of the DFA on the credit rating process seems to be inconclusive and too early to detect.
Introduction To Earnings Management
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Author : Malek El Diri
language : en
Publisher: Springer
Release Date : 2017-08-20
Introduction To Earnings Management written by Malek El Diri and has been published by Springer this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-08-20 with Business & Economics categories.
This book provides researchers and scholars with a comprehensive and up-to-date analysis of earnings management theory and literature. While it raises new questions for future research, the book can be also helpful to other parties who rely on financial reporting in making decisions like regulators, policy makers, shareholders, investors, and gatekeepers e.g., auditors and analysts. The book summarizes the existing literature and provides insight into new areas of research such as the differences between earnings management, fraud, earnings quality, impression management, and expectation management; the trade-off between earnings management activities; the special measures of earnings management; and the classification of earnings management motives based on a comprehensive theoretical framework.
Earnings Quality
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Author : Elisa Menicucci
language : en
Publisher: Springer Nature
Release Date : 2019-12-21
Earnings Quality written by Elisa Menicucci and has been published by Springer Nature this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-12-21 with Business & Economics categories.
This book provides an overview of earnings quality (EQ) in the context of financial reporting and offers suggestions for defining and measuring it. Although EQ has received increasing attention from investors, creditors, regulators, and researchers in different areas, there are various definitions of it and different approaches for its measurement. The book describes the relationship between EQ and earnings management (EM) since they can be considered related challenges, especially in the context of international financial reporting standards (IAS/IFRSs). EM occurs when managers make discretionary accounting choices that are regarded as either an efficient communication of private information to improve the informativeness of a firm’s current and future performance, or a distorting disclosure to mislead the firm’s true performance. The intentional manipulation of earnings by managers, within the limits allowed by the accounting standards, may alter the usefulness of financial reporting and lead to lower quality of earnings. The use of fair value in financial reporting has created a current debate about the impact it might have on EQ. At times, the high subjectivity in estimating fair value can allow opportunities for the exercise of management judgments and intentional bias, which can reduce the quality of financial reporting. Management discretion can result in high EM and hence in a reduction of EQ. Particularly during difficult financial periods, managers engage in EM to mask the negative effects of the turmoil, and in such circumstances accruals and earnings smoothing are attempts to reduce abnormal variations of earnings in such circumstances. This book is a valuable resource for those interested in wider perspectives on EQ and it adds to the research studies on this topic in the context of financial reporting.
Research In Accounting In Emerging Economies
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Author : Shahzad Uddin
language : en
Publisher: Emerald Group Publishing
Release Date : 2010-12-02
Research In Accounting In Emerging Economies written by Shahzad Uddin and has been published by Emerald Group Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010-12-02 with Business & Economics categories.
Includes research papers that examines various issues including the adoption of International Financial Reporting Standards (IFRS) and International Public Sector Accounting Standards (IPSASs), management accounting change in the context of public sector reforms, corporate reporting disclosures, auditing, etcetera.
Earnings Management
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Author : Joshua Ronen
language : en
Publisher: Springer Science & Business Media
Release Date : 2008
Earnings Management written by Joshua Ronen and has been published by Springer Science & Business Media this book supported file pdf, txt, epub, kindle and other format this book has been release on 2008 with Business & Economics categories.
This book is a study of earnings management, aimed at scholars and professionals in accounting, finance, economics, and law. The authors address research questions including: Why are earnings so important that firms feel compelled to manipulate them? What set of circumstances will induce earnings management? How will the interaction among management, boards of directors, investors, employees, suppliers, customers and regulators affect earnings management? How to design empirical research addressing earnings management? What are the limitations and strengths of current empirical models?
Substitution And Complementary Effects Of Accrual Based Earnings Management And Real Earnings Management
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Author :
language : en
Publisher:
Release Date : 2012
Substitution And Complementary Effects Of Accrual Based Earnings Management And Real Earnings Management written by and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with categories.
Earnings Management And Corporate Finance
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Author : Joanna Lizińska
language : en
Publisher: Taylor & Francis
Release Date : 2024-07-01
Earnings Management And Corporate Finance written by Joanna Lizińska and has been published by Taylor & Francis this book supported file pdf, txt, epub, kindle and other format this book has been release on 2024-07-01 with Business & Economics categories.
In today's dynamic landscape of accounting, corporate finance, and business management, earnings management has assumed paramount importance. Transparent and reliable accounting information is crucial for accurate corporate performance forecasting and financial decision-making. This book uniquely discusses practical earnings management methods within the accounting and taxation realms. It is supported by extensive international evidence linking informativeness of financial reports to companies’ financial decisions. Delving into the earnings management process, this book provides profound insights into how profits can be influenced through accounting choices and real business transactions. Real-life case studies will undoubtedly facilitate the understanding of accounting and taxation methods. Additionally, it unravels key elements of corporate finance puzzles related to the transparency of financial reports, including the macroeconomic environment, profit thresholds, cash management, audit quality, financing decisions, and financial health. With broad empirical evidence from various European countries, it multidimensionally explores the important link between the quality of information in financial statements and trade-offs behind financial decisions. The book serves as a valuable reference for international researchers in corporate finance, accounting, and corporate governance. It is also a powerful tool for business practitioners, including owners, lenders, auditors, regulatory and professional bodies, business partners, or other market participants. For those seeking the latest insights on earnings management, those producing or assessing accounting information, and those using financial reports in their research or business practice, this book is a must-read.
Earnings Management Conservatism And Earnings Quality
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Author : Ralf Ewert
language : en
Publisher:
Release Date : 2012
Earnings Management Conservatism And Earnings Quality written by Ralf Ewert and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012 with Earnings management categories.
This monograph reviews economic models that study earnings management and conservatism in an information economics framework. Both introduce a deliberate or a mandatory bias in financial reports. The fundamental issue this monograph addresses is what economic effects these biases have on earnings quality. We focus on models of managers in firms interacting with rational capital market participants, and briefly consider some contracting models. The models allow us to analyze earnings management and rational inferences by market participants in equilibrium in a variety of settings and to pinpoint costs and benefits of earnings management. We discuss how investors can elicit the maximum information from the biased reports and what potential remedies actually achieve in equilibrium. For example, accounting standards that reduce discretion for earnings management may be detrimental from a welfare point of view. In rational expectations models earnings quality can be defined as the information content in reported earnings. We discuss the earnings response coefficient, value relevance, and accounting-based earnings quality measures and how they reflect changes in earnings quality. Further, we review analytical work on conservatism of accounting standards and why conservatism can be welfare-enhancing even though it introduces a bias in the earnings reports. It is exactly through this bias that the benefit arises. Therefore, a differentiated view of earnings management and conservatism is warranted; neither is principally desirable or undesirable, but this depends on the circumstances. The benefit of equilibrium models is that they offer a rigorous explanation for the phenomena and show that sometimes conventional wisdom does not apply. There exist subtle interactions between accounting standards, the institutional environment, and earnings management that lead to several insights that challenge conventional wisdom. The models describe the economics behind these results and the particular circumstances.