Does analyst coverage constrain real earnings management?

2016 ◽  
Vol 59 ◽  
pp. 131-140 ◽  
Author(s):  
Jerry Sun ◽  
Guoping Liu
Keyword(s):  
Earnings Management ◽  
Real Earnings Management ◽  
Analyst Coverage

scholarly journals Analyst Coverage and Earnings Management Using Classification Shifting

2018 ◽  
Vol 7 (3) ◽  
pp. 172
Author(s):  
Fang Zhao
Keyword(s):  
United States ◽  
Earnings Management ◽  
Financial Analysts ◽  
Positive Association ◽  
The United States ◽  
Real Earnings Management ◽  
International Studies ◽  
Analyst Coverage ◽  
External Monitoring ◽  
Classification Shifting

This study examines the association between analyst coverage and classification shifting. Prior studies on external monitoring factors and classification shifting provide mixed results: international studies (Haw, Ho, & Li, 2011; Behn, Gotti, Herrmann, & Kang, 2013) find that external monitoring factors mitigate classification shifting, while Abernathy, Beyer, and Rapley (2014) find that external monitoring factors promote classification shifting when accrual-based earnings management and real earnings management are constrained. Using a sample of firms in the United States, this study finds a positive association between classification shifting and an external monitoring factor: analyst coverage. This result suggests that when higher analyst coverage has stronger monitoring role on earnings management, managers are more likely to use classification shifting. The implication of this study should be of interest to financial analysts.

Earnings Management in Firms with Data Security Breaches

2019 ◽  
Vol 33 (3) ◽  
pp. 267-284 ◽  
Author(s):  
Howard Xu ◽  
Savannah (Yuanyaun) Guo ◽  
Jacob Z. Haislip ◽  
Robert E. Pinsker
Keyword(s):  
Earnings Management ◽  
Data Security ◽  
Data Availability ◽  
Real Earnings Management ◽  
Matched Sample ◽  
Analyst Coverage ◽  
Subsequent Performance ◽  
Security Breaches ◽  
External Monitoring ◽  
The Cost

ABSTRACT Anecdotal research suggests that management is concerned about how Data Security Breaches (DSBs) impact a firm's financial performance. We investigate: whether managers in DSB firms manipulate earnings through real earnings management (REM) and/or accrual-based earnings management (AEM); how breach type, disclosure delay, and external monitoring impact earnings management activities; and how earnings management activities influence a DSB firm's performance. Using a propensity score matched sample, results suggest that DSB firms are more likely to manipulate earnings via REM, but not AEM. Additionally, we find that DSB firms engage in REM through cutting discretionary expenses, decreasing discretionary cash spending, and reducing the cost of goods sold through overproduction. We find some evidence that firms are more likely to increase REM when DSBs involve financial information or when firms delay the DSB disclosure or have low analyst coverage. We provide evidence that REM activities lead to lower subsequent performance in DSB firms. Data Availability: The data used are publicly available from the sources cited in the text.

Analyst Coverage and Real Earnings Management: Quasi-Experimental Evidence

2016 ◽  
Vol 51 (2) ◽  
pp. 589-627 ◽  
Author(s):  
Rustom M. Irani ◽  
David Oesch
Keyword(s):  
Earnings Management ◽  
Pressure Effects ◽  
Real Earnings Management ◽  
Short Term ◽  
Analyst Following ◽  
Analyst Coverage ◽  
Securities Analysts ◽  
Different Types ◽  
Quasi Experimental ◽  
Term Performance

AbstractWe study how securities analysts influence managers’ use of different types of earnings management. To isolate causality, we employ a quasi-experiment that exploits exogenous reductions in analyst following resulting from brokerage house mergers. We find that managers respond to the coverage loss by decreasing real earnings management while increasing accrual manipulation. These effects are significantly stronger among firms with less coverage and for firms close to the zero-earnings threshold. Our causal evidence suggests that managers use real earnings management to enhance short-term performance in response to analyst pressure, effects that are not uncovered when focusing solely on accrual-based methods.

PENGARUH MANAJEMEN LABA TERHADAP ABNORMAL RETURN

2009 ◽  
Author(s):  
Zirman Zirman ◽  
Lily Lily
Keyword(s):  
Earnings Management ◽  
Cash Flow ◽  
Significant Influence ◽  
Stock Price ◽  
Abnormal Return ◽  
Real Earnings Management ◽  
Financial Statement ◽  
Discretionary Accrual ◽  
Stock Price Reaction ◽  
Flow Components

This research investigates the consequence of earnings management by analyzing stock price reaction to the full set financial statement in 2008 which can be used by investors to detect earnings management by the firms. This research investigated two forms of earnings management (accrual and real earnings management). The samples is drawn from firms in IDX Statistic 2008 which categorized as active in frequency, value or volume. The method of analysis of this research used multi regression. The results show (1) discretionary accrual had negative significant influence to abnormal return, (2) abnormal cash flow from operation had negative significant influence to abnormal return. The results implicate that the investors are aware of the accrual earnings management (discretionary accrual) and real earnings management (abnormal cash flow) components in the earnings reported by the firms and they react negative to this components.

Real Earnings Management: The Auditor's Perspective

2014 ◽  
Author(s):  
Benjamin P. Commerford ◽  
Dana R. Hermanson ◽  
Richard W. Houston ◽  
Michael F. Peters
Keyword(s):  
Earnings Management ◽  
Real Earnings Management
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