Does the quarterly accrual anomaly exist in Taiwan's stock market? Evidence from Manager's earnings management

Management engages in earnings manipulation for different reasons. This article argues that low-growth firms with high free cash flow will opt for income-increasing earnings management in order to obscure the low profits derived from their investments in negative net present value (NPV) projects. On the other hand, we argue that the listed companies might be interested in being listed in the first market due to its privileges and to preserve the competitiveness, through managing their earnings upwardly, so that they can satisfy the condition of achieving a particular earnings limit. This article should advance the body of earnings management literature in the Jordanian context by examining the effect of the moderating role of an independent audit committee (IAC) in the association between surplus free cash flow (SFCF) and income-increasing discretionary accruals (DAC). Further, this is the initial empirical attempt to investigate the moderation effect of IAC between stock market segmentations (SMS) and positive DAC. The results of this current study offer original and beneficial information for the Jordanian government and other countries with a similar institutional environment because the study promotes the application of applying IAC as an efficient tool to constrain management behaviour towards manipulation of the accruals. On top of that, this research offers information concerning the prevailing situation of earnings management practices and corporate governance in Jordan, in which shareholders, local and international investors, policymakers, regulators and academic researchers are interested. Finally, panel data analyses and various statistical techniques are employed to derive conclusions.

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Earnings Management and Stock Liquidity

Advances in Finance, Accounting, and Economics - Comparative Research on Earnings Management, Corporate Governance, and Economic Value ◽

10.4018/978-1-7998-7596-3.ch004 ◽

2021 ◽

pp. 66-84

Author(s):

Hakan Özkaya

Keyword(s):

Stock Market ◽

Earnings Management ◽

Trading Volume ◽

Management Practices ◽

Positive Association ◽

Discretionary Accruals ◽

Market Liquidity ◽

Stock Liquidity ◽

Turnover Ratio ◽

Liquidity Measures

This chapter tests whether the earnings management practices in Turkey are considered informative or opportunistic by outside investors by examining its effect on stock liquidity. Earnings management is measured by discretionary accruals calculated by two different competing methods. Stock liquidity is also proxied by two different measures: the illiquidity measure of Amihud and the turnover ratio. Amihud's illiquidity measure indicates firms' daily price responses associated with the trading volume and the turnover ratio indicates how many times a stock changes its owner in a year. Relevant control variables are also included in the models. A positive association between earnings management and stock liquidity implies informative earnings management and vice versa. Earnings management is found to be positively associated with stock market liquidity. Results favor the informative earnings management view for Turkish firms and are robust to alternative specifications of earnings management and stock liquidity measures.

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Ownership concentration, earnings management and stock market liquidity: evidence from Malaysia

Corporate Governance ◽

10.1108/cg-06-2016-0139 ◽

2017 ◽

Vol 17 (3) ◽

pp. 490-510 ◽

Cited By ~ 13

Author(s):

Hamdan Amer Al-Jaifi

Keyword(s):

Stock Market ◽

Earnings Management ◽

Instrumental Variables ◽

Generalized Method Of Moments ◽

Market Liquidity ◽

Ownership Concentration ◽

Estimation Methods ◽

Content Type ◽

Stock Market Liquidity ◽

The Impact

Purpose This paper aims to examine whether ownership concentration and earnings management affect the stock market liquidity of Malaysian firms. Design/methodology/approach This study uses a sample of 2,020 yearly firm observations in Bursa Malaysia over the period 2009-2012. The ordinary least square regression is used to examine the relationships. The study undertakes a sensitivity test by regressing the main study variables by using different measurements. Another robustness test is then used, where a regression based on the change in variables and a one-year lag of the independent variables are used. Furthermore, to alleviate the concern of possible endogeneity, the simultaneity and reverse causality are checked using the lag of the dependent variable, fixed effect regression, two-stage least squares using the instrumental variables and the generalized method of moments using instrumental variables analysis. Findings The study finds that firms with a high level of ownership concentration have discrepancies in information between informed and uninformed traders, which impair the stock market liquidity. In addition, this study finds that firms with high earnings management experience greater liquidity. A possible explanation for this is that firms might manage earnings to convey private information to enhance the information content of the earnings. Overall, the evidence suggests that manipulating earnings signals information informatively, particularly in a country with a higher level of ownership concentration and a higher likelihood of expropriating minority shareholders. Originality/value This study enriches the limited empirical research devoted to the impact of earnings management and ownership concentration on stock market liquidity especially in the context of emerging economies. The findings of this study are robust to alternative liquidity measurements, to alternative estimation methods, and to endogeneity bias.

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Earnings Management and Quarterly Discretionary Accruals Level in the Brazilian Stock Market

Brazilian Business Review ◽

10.15728/bbr.2019.16.3.6 ◽

2019 ◽

Vol 16 (3) ◽

pp. 297-314

Author(s):

Rodolfo Rodrigues ◽

Clayton Melo ◽

Edilson Paulo

Keyword(s):

Stock Market ◽

Earnings Management ◽

Discretionary Accruals

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Earnings Management in Polish Companies

Comparative Economic Research ◽

10.2478/v10103-011-0023-1 ◽

2012 ◽

Vol 14 (3) ◽

pp. 137-150 ◽

Cited By ~ 1

Author(s):

Janusz Brzeszczyński ◽

Jerzy Gajda ◽

Tomasz Schabek

Keyword(s):

Stock Market ◽

Earnings Management ◽

Management Practices ◽

Threshold Value ◽

Asymmetric Distribution ◽

Earnings Per Share

This paper presents results of the investigation of a phenomenon known as "earnings management'' (EM) among the companies listed on the Polish stock market. The distribution of earnings per share (EPS) for the stocks around the threshold value of "zero" and the threshold of "recent performance" was analyzed in the period of years 1997-2010. Moreover, the changes of earnings for the stocks, which are suspected to manipulate their earnings, were also investigated. The results, which indicate asymmetric distribution of earnings around the zero threshold along with the relative deterioration of earnings in the year following the period when the companies were suspected to conduct earnings management practices, provide evidence that this phenomenon exists among Polish stock market companies.

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