scholarly journals Potential usage of Beneish's M-score under the conditions of selected segment of Slovak Economy

2021 ◽  
Vol 129 ◽  
pp. 03015
Author(s):  
Boris Kollar
Keyword(s):  
Earnings Management ◽  
Everyday Life ◽  
Statistical Methods ◽  
Financial Analysis ◽  
Value Added ◽  
Institutional Research ◽  
Comparison Analysis ◽  
Comprehensive Overview ◽  
Creative Accounting ◽  
The Impact

Research background: The motivation behind submitted article is the institutional research of earnings management. The aim is to identify the differences between the usage of creative accounting techniques in the form of Beneish’s M-score under the conditions of Slovak economy. The paper focuses on these differences and specifics and possible reasons behind them. Paper highlights also the impact of globalization on companies and therefore also behind their motives to use earnings management. It also offers several definitions of earnings management and also highlights the importance of the borderline knowledge between earnings management and fraudulent behavior. The Beneish’s model seems to be used by several of major Slovak companies in food segment. The aim was to analyse this sector of Slovak economy, because of its importance to everyday life of people. To assess the motivation behind its usage by these companies. Either it is because they want to transfer their earnings to maternal companies, or there are unexpected local circumstances. Purpose of the article: To describe specifics in the process of Beneish’s model usage under the conditions of selected segment of Slovak economy and also to highlight motivation behind its usage. Methods: The paper is built on the statistical methods, financial analysis as well as the methods of formal logic, like comparison, analysis or synthesis and deduction. Findings & Value added: Comprehensive overview of the earnings management definition, its forms and motives behind its usage and foremost specifics in its usage under the conditions of selected segments of Slovak economy.

scholarly journals Web Globalization and Its Possible Consequences on Usage of Different Creative Accounting Techniques

2021 ◽  
Vol 92 ◽  
pp. 02029
Author(s):  
Boris Kollar
Keyword(s):  
Earnings Management ◽  
Method Comparison ◽  
Value Added ◽  
Point Of View ◽  
Theoretical Point ◽  
Comprehensive Overview ◽  
Creative Accounting ◽  
New Directions ◽  
Definition Of ◽  
The Individual

Research background: The paper is oriented on influence analysis of globalization on usage of different techniques of creative accounting and its development. The concept of creativity and accounting in together has logical background. Creativity is generally perceived as a positive thing. It is a certain creativity and originality created by the individual. Among these techniques, the paper deals with earnings management and what differs it from fraudulent behavior. The first part deals with definition of earnings management and comparison of different approaches. The second part outlines the major differences and boarders between earnings management and fraud from theoretical point of view with the usage of multiple views from different authors. Third part deals with different forms of earnings management. The last part discusses motives behind the usage of earnings management by managers and impact of globalization on this decision making. Purpose of the article: To describe motives behind earnings management usage and potential new directions of these motives under the conditions of continuous internalization and globalization. Methods: The paper is built on the methods of formal logic. The most important one for the purpose of this article is descriptive method. Among others, there are analysis, graphic method, comparison and synthesis. Findings & Value added: Comprehensive overview of the earnings management definition, its forms and motives behind its usage.

scholarly journals Impact of Intellectual Capital Management and Human Capital Circulation on Business Practice at Macro- and Micro Level

2017 ◽  
Vol 9 (5) ◽  
pp. 6-16 ◽  
Author(s):  
Iryna Oleynikova ◽  
Zhanna Balabaniuk
Keyword(s):  
Human Capital ◽  
Intellectual Capital ◽  
Financial Analysis ◽  
Economic Value ◽  
Weighted Average ◽  
Value Added ◽  
General Acceptance ◽  
Managerial Implications ◽  
Standard Practices ◽  
The Impact

Nowadays the main potential for growth comes from the ability to innovate and succeed with breakthrough ideas. However, despite growing importance of the subject matter, there are still no standard practices that would perform such a measurement and employ tendencies of human capital circulation. Various attempts have been made over recent years, but none have achieved general acceptance among experts in the business field. Although there is no universally accepted theory, each has its own strengths and weaknesses in the deriving approximate value of intellectual capital for various companies. In this work, we looked over some theories that have been suggested to estimate intellectual capital and analyzed data from Ukrainian IT companies in order to prove how important measurement of intellectual capital and human capital circulation trends to allow for much better representation of an organization’s competitive position. Additionally, the impact of intellectual capital on various Key Performance Indicators, such as Economic Value Added and Weighted Average Cost of Capital, was examined with supporting financial analysis performed. The paper concludes with an overview of methodological and managerial implications of the research, theoretical and practical limitations and possible improvements, and considerations for further research in the field of study.

scholarly journals COMPARISON OF THE TERMS CREATIVE ACCOUNTING, EARNINGS MANAGEMENT AND FRAUDULENT ACCOUNTING THROUGH BIBLIOGRAPHIC ANALYSIS

2021 ◽  
Vol 15 (2) ◽  
pp. 27-37
Author(s):  
Roman Hlawiczka ◽  
Roman Blazek ◽  
Gabriel Santoro ◽  
Gianluca Zanellato
Keyword(s):  
Earnings Management ◽  
Revenue Management ◽  
Value Added ◽  
Accounting Earnings ◽  
Interesting Insight ◽  
Creative Accounting ◽  
Keywords And Phrases ◽  
World Class ◽  
Accounting Earnings Management ◽  
Mind Maps

Research background: The article focuses on the issues of creative accounting, earnings management, and fraudulent accounting, which are global phenomena. These concepts are well known globally, as they are dealt with by many world-renowned authors. In this study, we applied bibliometric analysis to these concepts to reveal their interconnectedness. The research was conducted on a sample of more than 19,000 articles. Purpose of the article: The main goal of the study is to use the VosViewer design and visualisation program to capture and record the most common terms associated with the terms, ‘creative accounting’, ‘revenue management’, and ‘fraudulent accounting’, and to show a biometric network of the most commonly used terms. Methods: To capture and illustrate important words associated with the above terms, the VosViewer program was used, which drew mind maps that represented the words and expressions that were closest to the topic. Scientific articles from the Web of Science database, which contains many world-class articles related to the topic, were used as input data. Findings & Value added: The results of the study provided an interesting insight into the keywords associated with the issues of creative accounting, revenue management, and fraudulent accounting. The results show that the keywords and phrases are related, as several of them are repeated in each of the terms mentioned. This means that, although these terms are different in nature, they are nevertheless connected by many words and phrases. However, it remains necessary to observe that each of the given terms appears on a different colour of fraud (white, grey, or black fraud).

scholarly journals Current challenges of globalization in the automotive industry in European countries

2021 ◽  
Vol 92 ◽  
pp. 01015
Author(s):  
Vladimír Hojdik
Keyword(s):  
Statistical Methods ◽  
Future Development ◽  
Automotive Industry ◽  
Value Added ◽  
European Countries ◽  
Automotive Sector ◽  
Industry Development ◽  
Global Trends ◽  
The Impact

Research background: Research in this paper is based on analysis of data and documents published by official institutions and relevant studies and papers. Purpose of the article: This paper assesses how the pandemic situation influenced automotive sector in countries of Europe. It evaluates differences between European countries, in terms of automotive industry operation after COVID-19 crisis. It also outlines global trends and challenges for future industry development. Methods: In the research, we use mainly general methods, especially analysis, synthesis and comparison. Among the specific methods, we use statistical methods to obtain, process, explain and interpret data. Findings & Value added: In the findings we present the impact of COVID-19 on automotive industry in European countries. In the end, we present thoughts on globalization challenges for automotive industry, and possible ways for its future development.

scholarly journals The Impact of the Financial Stability on the Earnings Management Practices

2021 ◽  
Vol 129 ◽  
pp. 03028
Author(s):  
Anna Siekelova
Keyword(s):  
Earnings Management ◽  
Significant Relationship ◽  
Financial Stability ◽  
Management Practices ◽  
Pearson Correlation ◽  
Explanatory Power ◽  
Value Added ◽  
Academic Community ◽  
Financial Reports ◽  
The Impact

Research background: In recent years, the world economy has changed. Earnings management, as a modern phenomenon, plays an important role within the financial world under the condition of globalization. The academic community deals with the issue of the informative value of the reported financial results. The informative value of these results becomes questionable when we realize that managers have not only the motivation but also the ability to use the earnings management techniques to influence these results. Purpose of the article: The aim of the contribution is earnings management detection by using a model with the highest explanatory power, as well as verifying hypotheses about the existence of a statistically significant relationship between earnings management practices and financial stability within a sample of companies. Methods: Based on the results of the explanatory power examination, the modified Jones model is recommended for earnings management detection within the sample of V4 companies. Data were obtained from the Amadeus database. The sample contains 1,480 financial reports of companies from 2019 to 2017. Research is focused on V4 companies that have the sum of total assets higher than 2,000,000 EUR, as well as the sum of operating revenue is higher than 100,000 EUR. Also, the Pearson correlation coefficient was used to test the hypotheses about the existing statistically significant relationship between financial stability and earnings management practices. Findings & Value added: The article provides an overview of the earnings management issue within V4 countries. It examines the earnings management practices and the impact of financial stability on the level and direction of earnings management practices.

scholarly journals Earnings Quality and Accruals over Company´S Life Cycle

2021 ◽  
Vol 92 ◽  
pp. 02043
Author(s):  
Lucia Michalkova
Keyword(s):  
Life Cycle ◽  
Earnings Management ◽  
Earnings Quality ◽  
Explanatory Power ◽  
Value Added ◽  
Specific Factor ◽  
Homogeneity Test ◽  
Qualitative Variable ◽  
Conservative Accounting ◽  
The Impact

Research background: The increasing number of bankruptcies and the growing risk of financial distress highlight the need for quality financial statements, conservative accounting or increase the need for quality tools to detect the occurrence of earnings management. However, the life cycle of a company affects financial performance and key aspects of earnings management, which examined in the international context only to a small extent. Purpose of the article: The paper examines the impact of the life cycle and country-specific factor on the value of discretionary accruals in the tourism sector in the Visegrad countries, which are among the most vulnerable sectors in the coming economic crisis. Methods: This study uses the method of two-way analysis of variance with interaction, while also testing the assumptions of the model by normality tests, homogeneity test and post hoc tests (Scheffé and Tukey methods). Findings & Value added: Earnings quality changes during the life cycle of a business; whereas in the first stages (introduction, growth) and in decline they use downward earnings management. On the contrary, mature and shake-out companies have enough positive earnings before taxes, which is a prerequisite for tax profit optimization. The level of earnings management in tourism varies significantly at different stages of the life cycle, but also in different countries. The results imply that the qualitative variable corporate life cycle in interaction with the country is an important explanatory variable, the implementation of which can improve the explanatory power of earnings management models in Central European developing countries.

scholarly journals Impact of earnings management on bankruptcy prediction

2021 ◽  
Vol 129 ◽  
pp. 03016
Author(s):  
Maria Kovacova ◽  
Martin Lacny ◽  
Jaroslav Gonos
Keyword(s):  
Literature Review ◽  
Earnings Management ◽  
Prediction Models ◽  
Value Added ◽  
Financial Statements ◽  
Bankruptcy Prediction ◽  
Direct Impact ◽  
Prediction Ability ◽  
Positive View ◽  
The Impact

Research background: Managers of the companies intentionally manipulate business earnings to achieve the required status of the company. Earnings management is a legal and widely preferred phenomenon of business finance that financial managers use to maintain and improve the company´s competitiveness. The consequence of these activities is to provide a positive view for the owners, encourage the profitability for the creditor and the investors as well as demonstrate economic strengths to competitors. Consequently, these activities lead to the modification of financial statements of the companies, which have a direct impact on the prediction ability of bankruptcy models. Purpose of the article: The main goal of the paper is to point out the impact of earnings management in the companies on the possibility and ability of bankruptcy prediction. There is a correlation between application of earnings management in companies followed by changes in financial statements of the companies. Therefore, the ability of bankruptcy prediction models to predict possible financial problems of the company is questionable. Methods: The paper presents the connection of earnings management and its impact on bankruptcy prediction based on the bibliometric overview and deep literature review. Findings & Value added: The paper presents results, connections and impact of earnings management on bankruptcy prediction.

scholarly journals Impact of the global pandemic situation of COVID-19 on the growth of the economic level of private security services in the selected region

2021 ◽  
Vol 129 ◽  
pp. 01003
Author(s):  
Martin Boros ◽  
Andrej Velas ◽  
Zuzana Zvakova ◽  
Robert Mendel
Keyword(s):  
Financial Analysis ◽  
Slovak Republic ◽  
Value Added ◽  
Private Security ◽  
Point Of View ◽  
Security Services ◽  
Profitability Analysis ◽  
Economic Level ◽  
The Impact

Research background: The research presented in the article is focused on assessing the impact of measures implemented against the spread of COVID-19 in the conditions of the Slovak Republic. We will focus primarily on curfews, work at home and the like, which are directly related to private security services and have affected the company’s economic situation. An important factor influencing the economic level of society is also the ban on organizing sports events, at which private security services ensure the safety and protection of visitors, athletes and organizers. Purpose of the article: The aim of the article is to determine the degree of impact of the pandemic situation caused by COVID-19 on the economic level and profitability of the mentioned companies in the selected Slovak region by means of a multi-year financial analysis of private security services. Methods: The article will use several methods such as financial analysis, profitability analysis, comparison and other scientific methods such as forecasting the future situation in case they would take long-term anti-pandemic measures. Findings & Value added: The result of the research presented in the article will be an evaluation of the degree of impact on companies operating on the Slovak market in the field of security from the point of view of profitability due to the impossibility of performing employment. Among other things, the expected estimate of the time period that private security services can manage if they would last long-term compared to pandemic measures will be presented.

scholarly journals Detection of earnings management in insurance companies in Slovakia

2021 ◽  
Vol 129 ◽  
pp. 03029
Author(s):  
Lucia Svabova ◽  
Roman Blazek
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Value Added ◽  
Real Data ◽  
Financial Statements ◽  
Insurance Companies ◽  
Fraudulent Financial Reporting ◽  
Creative Accounting ◽  
The World ◽  
History Of

Research background: Manipulation and the use of creative accounting or earnings management have become an increasingly popular topic in the history of researchers. Since 2002, this issue has attracted the attention of scientists and economists around the world. On the Slovak market, more than 30 insurance companies are actually operating, and some analyses have revealed that some of these insurance companies are engaging in activities that do not comply with the law. Purpose of the article: The article aims to use selected models for the detection of fraudulent financial reporting to determine whether there are unfair activities in insurance companies in Slovakia. At the same time, we evaluate the reliability of selected models and recommend the best models for this sector. Methods: Based on the set criteria, the Beneish model with five parameters and the Beneish model with eight parameters are applied to selected 20 companies in the Financial and Insurance activities sector to determine which companies have manipulated the financial statements. The analysis is performed using real data on Slovak companies from the Amadeus database. Findings & Value added: For the Financial and Insurance activities industry, we recommend using the Beneish model with eight parameters. Comparing the two models, we can conclude that this model is more accurate and thorough. The reason is also that this model works with more data from the financial statements.

scholarly journals Does the life cycle affect earnings management and bankruptcy?

2021 ◽  
Vol 12 (2) ◽  
pp. 425-461
Author(s):  
Pavol Durana ◽  
Lucia Michalkova ◽  
Andrej Privara ◽  
Josef Marousek ◽  
Milos Tumpach
Keyword(s):  
Life Cycle ◽  
Earnings Management ◽  
Financial Performance ◽  
Financial Management ◽  
Mixed Model ◽  
Value Added ◽  
Bankruptcy Risk ◽  
Corporate Life Cycle ◽  
The Impact

Research background: Deteriorating economic conditions and a negative outlook increase the pressure on financial management and the need to show high financial performance. According to Positive Accounting Theory, the growing risk of bankruptcy is associated with the phenomenon of earnings management. Bankruptcy risk and the quality of reported profits, along with other aspects of financial performance, vary throughout the company's life cycle. Nevertheless, these factors or their interactions are investigated only to a very small extent. Purpose of the article: The aim of this study is to clarify the impact of corporate life cycle and bankruptcy on earnings management, in order to describe behaviour of companies at different stages of corporate life cycle. Methods: A hierarchical mixed model with a random time and industry effect was chosen as appropriate because it allows the investigation of multilevel data that is not independent. The sample covers the financial indicators of more than 33,000 Central European companies from 2015?2019. The non-sequential Dickinson model, company age, and three models of accrual earnings management were used as proxies for the company's life cycle and quality of reported profit. Findings & value added: Earnings management and bankruptcy risk have a U-shape, indicating that financially distressed firms reduce reported accounting profit at the Introduction, Decline and, to a lesser extent, at the Growth stage. Slovak and Czech companies manipulate profits to a similar extent, Hungarian companies increase accounting profit to a greatest extent than the surveyed countries by controlling bankruptcy ? life cycle effect; however, the variability of accounting manipulations across industries has not been demonstrated. These findings imply that start-ups and declining businesses provide crooked financial statements to obtain more favourable debt covenants, and estimating discretionary accruals using life-cycle subsamples can improve the predictive power of accrual earnings management models.

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