Link Between Managerial Incentives And The Need To Update Accounting Standards
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Link Between Managerial Incentives And The Need To Update Accounting Standards
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Author : Anne Marie O'Sullivan
language : en
Publisher:
Release Date : 2006
Link Between Managerial Incentives And The Need To Update Accounting Standards written by Anne Marie O'Sullivan and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with categories.
Beyond Perceptions Crafting Meaning
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Author : Cheryl R. Lehman
language : en
Publisher: Emerald Group Publishing
Release Date : 2019-05-28
Beyond Perceptions Crafting Meaning written by Cheryl R. Lehman 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 2019-05-28 with Business & Economics categories.
Researching accounting’s participation in financial regulation, banking practices, managerial incentives and environmental disclosures this volume presents scholarly work adopting interdisciplinary approaches in auditing and accountability realms.
Managerial Incentives Risk Management And Accounting Policy
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Author : Sonku Kim
language : en
Publisher:
Release Date : 1996
Managerial Incentives Risk Management And Accounting Policy written by Sonku Kim and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 1996 with categories.
Managerial Incentives Ownership Structure And Goodwill Impairment
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Author : Alwi Abdulgader Al-Aidaros
language : en
Publisher:
Release Date : 2014
Managerial Incentives Ownership Structure And Goodwill Impairment written by Alwi Abdulgader Al-Aidaros and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2014 with Accounting categories.
The introduction of International Financial Reporting Standards (IFRS) resulted in a significant change of the accounting treatment for goodwill. This change has been represented by the issuance of FRS 3 - Business Combinations, and FRS 136 - Impairment of Assets. These standards require goodwill to be tested for impairment and the impairment losses to be written off against income instead of amortizing it to earnings over useful economic life. Many countries have adopted these standards with the aim of enhancing the financial reporting quality including Malaysia which adopted Financial Reporting Standards (FRS) in 2006 and beginning 1 January 2006, Malaysian companies are required to comply with all Financial Reporting Standards (FRSs) including FRS 3 - Business Combinations, and FRS 136 - Impairment of Assets. Standard setters' and regulatory bodies such as the Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) stated that IFRS 3, which regulates business combinations and IFRS 36, which regulates impairment of assets were issued to provide users with more useful information about the underlying economic value of goodwill. However, the new standards have been criticized by academics and practitioners members for leaving significant rooms for management interpretation, judgment, and bias. Hence, the main purpose of this study is to examine the relationship between managers' incentives and the magnitude of goodwill impairment losses reported by public listed companies in Malaysia. Additionally, this dissertation examines whether the impact of managerial incentives on the magnitude of goodwill impairment losses is moderated by ownership structure. Based on the agency framework it is expected that the magnitude of reported goodwill impairment is influenced by the managerial incentives. Three incentives have been identified, namely debt covenant avoidance, managerial compensation maximization, and political interventional avoidance. This dissertation employs secondary data of listed firms in the Bursa Malaysia derived from annual reports over five years spanning from 2007 to 2011. Based on Tobit multiple regression technique, it is found that managerial incentives to avoid violation of debt covenant is negatively associated with the magnitude of goodwill impairment, which support the debt covenants hypothesis. In addition, firm performance is found to be negatively related to goodwill impairment losses which suggests that firms with low performance record higher goodwill impairment losses and confirmed the Healy (1985) compensations hypothesis. While the direct relationship between firm size and the magnitude of goodwill impairment does not support the political cost hypothesis, the analysis of the moderating effect of ownership structure surprisingly show that, firms with highly concentrated owners, the larger the firm size the higher the amount of goodwill impairment losses, consistent with the political cost hypothesis. However, none of the incentives variables are significantly related to the magnitude of goodwill impairment in the presence of institutional owners.
Studies On The Importance Of Incentives And Standards In The Financial Reporting Process
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Author : Urska Kosi
language : en
Publisher:
Release Date : 2010
Studies On The Importance Of Incentives And Standards In The Financial Reporting Process written by Urska Kosi and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with categories.
This thesis consists of three self-contained studies on the factors affecting the financial reporting process. The first study investigates the role of reporting incentives in private firms. I observe significant decrease in asset -write-offs after an adverse change in tax treatment of write-offs. This change does not affect any other economic incentive to use accounting discretion and thus permits me to disentangle the tax- minimisation incentive from other incentives including debt contracting, dividends and employee relations that cause the anomalous positive relation between write-offs and profitability. I provide new and complementary evidence that tax incentives play an important role in firms' financial reporting behaviour. The second study examines whether mandatory adoption of IFRS affects the source and cost of debt financing. First, I find that mandatory IFRS adopters more likely issue public debt. Second, I show that IFRS adopters pay lower bond yield spreads but there is no significant effect on loan spreads. My findings are consistent with IFRS enhancing the quality and comparability of accounting information, and suggest that mandatory IFRS adoption is beneficial primarily for bond investors. Finally, I find that the positive effects of IFRS are present only in countries with strong institutions and less harmonised accounting standards. The third study investigates whether mandatory IFRS adoption affects credit relevance of accounting information. First, I find significant increase in credit relevance of mandatory IFRS adopters after the adoption. Second, I show that increase in credit relevance after IFRS adoption is greater for IFRS firms than for matched US \ \ firms, Third, I find that IFRS firms exhibit relatively higher credit relevance compared to US firms in the post-adoption period. Additionally, I show that IFRS effects vary between countries. I interpret higher credit relevance of IFRS-based accounting information relative to local standards as an increase in accounting quality from the debtholders' perspective. '.
Executive Compensation And Financial Accounting
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Author : David Aboody
language : en
Publisher: Now Publishers Inc
Release Date : 2010
Executive Compensation And Financial Accounting written by David Aboody and has been published by Now Publishers Inc this book supported file pdf, txt, epub, kindle and other format this book has been release on 2010 with Business & Economics categories.
Executive Compensation and Financial Accounting provides research perspectives on the interface between financial reporting and disclosure policies and executive compensation. In particular, it focuses on two important dimensions: - the effects of compensation-based incentives on executives' financial accounting and disclosure choices, and - the role of financial reporting and income tax regulations in shaping executive compensation practices. Executive Compensation and Financial Accounting examines the key dimensions of the relation between financial accounting and executive compensation. Specifically, the authors examine the extent to which compensation plans create incentives for executives to make particular financial reporting and disclosure choices. They also examine the extent to which accounting regulation creates incentives for firms to design particular compensation plans for their executives.
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.
Accounting Standards And Earnings Management
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Author : Ferdy Van Beest
language : en
Publisher: LAP Lambert Academic Publishing
Release Date : 2012-06-01
Accounting Standards And Earnings Management written by Ferdy Van Beest and has been published by LAP Lambert Academic Publishing this book supported file pdf, txt, epub, kindle and other format this book has been release on 2012-06-01 with categories.
This book examines the effect that rules-based and principles-based accounting standards have on the level and nature of earnings management decisions. A cherry picking experiment is conducted to test the hypothesis that a substitution effect is expected from accounting decisions to transaction decisions after a reduction of accounting discretion. Moreover, no earnings management is expected without sufficient incentive to engage in earnings management and no differences are expected in the total level of earnings management between accounting standards. In addition, the study holds an elaborate post experimental survey and in depth interviews to triangulate this entire topic. Results show a substitution effect in which more transaction decisions take place in a rules-based environment and more accounting decisions in a principles-based setting. Managers only engage in earnings management when sufficient incentives are involved. The level of earnings management does not depend on the accounting standards. These results suggest that changing from rules-based to principles-based accounting standards will only affect the nature of earnings management.
On The Relation Between Conservatism In Accounting Standards And Incentives For Earnings Management
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Author : Qi Chen
language : en
Publisher:
Release Date : 2007
On The Relation Between Conservatism In Accounting Standards And Incentives For Earnings Management written by Qi Chen and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2007 with categories.
This paper studies the role of conservative accounting standards in alleviating rational yet dysfunctional unobservable earnings manipulation. We show that when accounting numbers serve both the valuation role (in which potential investors use accounting reports to assess a firm's expected future payoff) and the stewardship role(in which current shareholders rely on the same reports to monitor their risk-averse manager), current firm owners have incentives to engage in earnings management. Such manipulation reduces accounting numbers' stewardship value and leads to inferior risk-sharing. We then show that risk-sharing, and hence contract efficiency, can be improved under a conservative accounting standard where, absent earnings management, accounting earnings represent true economic earnings with a downward bias, compared to under an unbiased standard where, absent earnings management, accounting earnings represent true economic earnings without bias.
International Financial Reporting Standards And New Directions In Earnings Management
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Author : Oliveira, Jonas da Silva
language : en
Publisher: IGI Global
Release Date : 2019-03-22
International Financial Reporting Standards And New Directions In Earnings Management written by Oliveira, Jonas da Silva and has been published by IGI Global this book supported file pdf, txt, epub, kindle and other format this book has been release on 2019-03-22 with Business & Economics categories.
The fiscal market is an unpredictable torrent of information that modern organizations strive to understand. Business professionals dedicate themselves to understanding uncertain results around economic performance to improve management, reporting standards, and predict trends in financial statements. International Financial Reporting Standards and New Directions in Earnings Management is an essential reference source that discusses identifying the behavioral patterns of managers and the accounting policies they use in different opportunistic circumstances. Featuring research on topics such as earnings quality, risk reports, and investor protection, this book is ideal for regulatory authorities, accountants, impression managers, auditors, academics, students, and researchers seeking coverage on the theoretical, empirical, and experimental studies that relate to the different themes within earnings management.