scholarly journals Detection of earnings management by different models

2021 ◽  
Vol 92 ◽  
pp. 02005
Author(s):  
Yuriy Bilan ◽  
Veronika Jurickova
Keyword(s):  
Earnings Management ◽  
Scientific Method ◽  
Value Added ◽  
Financial Statements ◽  
Theoretical Knowledge ◽  
Market Position ◽  
Accounting Systems ◽  
Thin Line ◽  
Calculation Process ◽  
Global World

Research background: Earnings management means the usage of gaps in the legislative frameworks of individual countries and their accounting systems in the global world. Businesses thus adjust profits and revenues to the form that is desirable and desired for them. However, there is a very thin line between fraud and earnings management. By adjusting their financial statements, companies seek to impress potential investors and influence their own market position. Purpose of the article: The main goal of the article is to describe the possibilities and methods of detection of earnings management in companies in aspects of globalization. The article contains a brief overview of theoretical knowledge and definitions about earnings management. The contribution of the article lies in the application of the selected method to a specific company and based on the outputs of the model to determine whether the company is using earnings management. Methods: The scientific method of analysis was used in the article, on the basis of which the obtained information was necessary for further calculations. A calculation based on the Beneish model was used to determine the use of earnings management. Findings & Value added: The output of the article is the application of the Beneish model in the detection of earnings management in a selected company. In the calculation process, pre-established theoretical knowledge on the issue and the numerical characteristics of the selected company were used. Finally, the application of earnings management in the company can be ruled out.

scholarly journals Transfer Pricing and Controlled Transactions in Connection with Earnings Management and Tax Avoidance

2021 ◽  
Vol 92 ◽  
pp. 02031
Author(s):  
Katarina Kramarova
Keyword(s):  
Earnings Management ◽  
Income Tax ◽  
Transfer Pricing ◽  
Tax Avoidance ◽  
Value Added ◽  
Financial Statements ◽  
Discretionary Accruals ◽  
Detection Capability ◽  
Related Party Transactions ◽  
Business Entities

Research background: The way of pricing intra-group transactions (controlled transactions in the terms of transfer pricing) should be in line with the arm´s length principle, whether we consider nationally or transnationally related business entities. If this is not the case, these operations are a tool for earnings management between the companies. It is known that income tax is perceived by businesses as an unproductive withdrawal of own funds without obvious consideration, and therefore managing economic transactions at the level of related-party entities in order to minimize the tax liability is obvious and even expected. Purpose of the article: The aim of the paper is to find out if controlled transactions are used in connection with earnings management and tax avoidance in the selected Slovak company using proxies, which may carry this detection capability (ratios of related party transactions, book-tax differences ratio, and discretionary accruals ratio). Methods: The analytical part of the paper follows the Slovak transfer pricing legislation in force. Following the existing research studies, we test hypothetical relationship between the indicators of earnings management, related party transactions and tax avoidance by applying correlation analysis. We worked mainly with publicly available data from financial statements and notes to financial statements. Findings & Value added: The results indicate that the company managed earnings rather downwards, since the values of discretionary accruals ratio were negative. On the other side, it was not proven that earnings management was carried out purely with the intention of minimizing tax liability.

scholarly journals Pengaruh Mekanisme Good Corporate Governance Terhadap Manajemen Laba

Syntax Idea ◽  
2021 ◽  
Vol 3 (12) ◽  
pp. 2544
Author(s):  
Dwi Urip Wardoyo ◽  
Rekha Fakhriyah ◽  
Risca Amelia
Keyword(s):  
Corporate Governance ◽  
Literature Review ◽  
Earnings Management ◽  
Financial Reporting ◽  
Value Added ◽  
Financial Statements ◽  
Data Sources ◽  
Good Corporate Governance ◽  
Reported Earnings ◽  
A Company

One of the most important information in the financial reporting of a company is information about earnings. Users of financial statements can find out the extent to which the company has carried out value-added activities through profit information. The company's performance can also be seen from the company's profit information to be taken into consideration in making decisions. With a significant impact on earnings, the company's management will try to manage reported earnings. This study aims to determine what factors can affect earnings management. The method used in this study is a structured review or review method so that it can identify any factors that can affect earnings management. The method insearching for article data sources is done through Google Scholar (2019 - 2021) which provides relevant scientific writing articles according to this research. Based on the results of a literature review of 30 articles or journals revealed that good corporate governance has a negative or insignificant effect on earnings management

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 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 Analysis of Motives behind the Usage of Earnings Management in Practice under the Conditions of Global Economy

2021 ◽  
Vol 92 ◽  
pp. 02054
Author(s):  
Monika Poradova
Keyword(s):  
Earnings Management ◽  
Global Economy ◽  
Management Practices ◽  
Method Comparison ◽  
Value Added ◽  
Financial Statements ◽  
Global Environment ◽  
Economic Result ◽  
Results Management ◽  
Result Management

Research background: Due to the complexity of the issue of global economic result management, the presented paper focused on specific procedures that are used comprehensively in practice in a global environment. The present paper consists of four parts. The first part of the paper deals with the theoretical aspects of the issue addressed. The second part consists of a combination of themes and a description of the methods that are used globally in the economic environment. The third part includes an analysis of countries that were among the largest manipulators of the global economic result from 2009 to 2018. Subsequently, possible impacts on the financial statements are prepared. The fourth part is devoted to the conclusions of the issue addressed. Purpose of the article: The aim of this paper is to compare the motives that lead to the application of results management practices globally in a global environment. Methods: In the processing of the present paper, a descriptive method, comparison and synthesis were used. Findings & Value added: Accounting standards point out that earnings management can be conducted within the regulatory framework as well as in the conflict of the global environment. The result of the present paper is a comprehensive look at the procedures and issues of earnings management with regard to the functions of the financial statements in the global economy.

scholarly journals Detecting the manipulation of earnings in the company: triangulation of methods

2021 ◽  
Vol 92 ◽  
pp. 02061
Author(s):  
Lucia Svabova
Keyword(s):  
Earnings Management ◽  
Financial Management ◽  
Accounting Information ◽  
Value Added ◽  
Financial Statements ◽  
Modern Approach ◽  
Global View ◽  
Current Topic ◽  
The World ◽  
A Current

Research background: Earnings management is a current topic in the world of financial management. It can be considered as a global phenomenon of today’s modern approach to the reporting of accounting information and related accounting decisions of managers, which may affect the overall results of financial statements. Many companies use earnings management as a tool to maintain stable profit growth or prevent “red numbers” from appearing in financial statements that are not beneficial to the company. Purpose of the article: Understanding what earnings management represents and why it is performed is essential for users of a company’s financial statements. However, detecting manipulation in companies is not easy, because Earnings management is successful if it is invisible. Therefore, statistical models are usually used to detect these practices. The aim of this paper is to show that the use of several methods strengthens the results obtained and is more probably to reveal possible manipulation of earnings in companies. Methods: In this study, we used triangulation of methods to detect Earnings management in companies: one of the most frequently used model in this area, Beneish model, but also the model for Slovak companies M-score SVK, which was created under the inspiration of the Beneish model and finally, the model of the company’s propensity score of manipulation. Findings & Value added: The study provides a global view of the possibilities of applying these three models to detect manipulation in the company. The idea of triangulation of methods is based on the consideration that if all the methods detect possible manipulation, it is very likely that it actually happens in the company.

scholarly journals Evaluation of earnings of small and medium-sized enterprises in Slovakia in aspect of globalization

2021 ◽  
Vol 92 ◽  
pp. 07028
Author(s):  
Veronika Jurickova ◽  
Anna Kubjatkova
Keyword(s):  
Economic Development ◽  
Market Economy ◽  
Scientific Method ◽  
Slovak Republic ◽  
Value Added ◽  
Theoretical Knowledge ◽  
Mutual Comparison ◽  
The Individual ◽  
Positive Effect ◽  
Constant Support

Research background: Small and medium-sized enterprises are a pillar of every market economy in aspect of globalization. The importance of their position is given mainly by their positive effect on employment. One of the basic elements of healthy economic development in the country is the dynamic increase of these companies, which can satisfy the requirements of even the most demanding customers with their high adaptability and creativity. Purpose of the article: The main goal of the article is to examine the profits of small and medium-sized enterprises from 2015 to 2019. The article also contains the characteristics of small and medium-sized enterprises and their contribution to the economy of the Slovak Republic. The contribution of the article lies in a summary of theoretical knowledge about small and medium-sized enterprises and an examination of the reasons why there was an increase or decrease in profit in individual years. Methods: The scientific method of analysis was used in writing the article, where we came to the appropriate conclusions based on the examination of individual parts. The individual years were compared with each other using the method of mutual comparison. Findings & Value added: The output of the whole article is the finding that small and medium-sized enterprises represent an important part of the economy of the Slovak Republic. In the Slovak republic, the constant support and development of these businesses are essential because they have a significant impact on many economic indicators.

scholarly journals The credibility of earnings announced by new stock companies: accrual and real earnings management

Equilibrium ◽  
2021 ◽  
Vol 16 (3) ◽  
pp. 661-677
Author(s):  
Tomasz Sosnowski
Keyword(s):  
Earnings Management ◽  
Initial Public Offering ◽  
Financial Reporting ◽  
Value Added ◽  
Financial Statements ◽  
Discretionary Accruals ◽  
Cash Flows ◽  
Production Costs ◽  
Real Earnings Management ◽  
The Impact

Research background: An initial public offering (IPO) creates an excellent opportunity to research the impact of changes in the institutional environment of companies on the trustworthiness of the information disclosed in financial statements. Purpose of the article: The main aim of the study is to analyze the use of accrual and real earnings management to inflate earnings, revenue, or total assets around the going public event. Therefore, this paper contributes to the stream of study on the quality of financial reporting of new stock companies. Methods: Two main approaches reflect the use of various types of earnings management activities, i.e., discretionary accruals and real earnings management. In both cases, it was necessary to use proper OLS method estimated models to identify the normal level of categories that affect the results reported in financial statements. Findings & value added: Based on a sample of 183 IPOs from the Warsaw Stock Exchange between 2005 and 2015, generally, managers of newly-listed companies actively use discretionary accruals, reduce production costs and certain discretionary expenses, and abnormal cash flows from operations ? i.e., all proxies of earnings management used in the paper ? in the periods around the IPO. In the period prior to the IPO, managers more often introduce techniques typical of the real sphere of the company's operations, in particular, the deliberate modeling of certain discretionary costs. In turn, the use of discretionary accruals dominates in the year after the IPO.

Why Do Firms Write Off Their Goodwill? A Comparison of Different Accounting Systems

2015 ◽  
pp. 23-40 ◽  
Author(s):  
Francesco Avallone ◽  
Claudia Gabbioneta ◽  
Paola Ramassa ◽  
Marco Sorrentino
Keyword(s):  
Good Deal ◽  
Financial Statements ◽  
Cash Flows ◽  
Accounting System ◽  
Anglo Saxon ◽  
Accounting Systems ◽  
Ifrs Adoption ◽  
The Future

Increased comparability of financial statements across adopting countries is one of the main objectives of IFRS adoption. The level of achievement of this objective, however, is still debatable. While some studies have documented that crosscountry comparability of financial statements has increased after IFRS adoption, other studies have found that comparability has actually decreased since 2005. We contribute to this debate by studying whether the motivations for goodwill writeoff are the same or vary across countries with different accounting systems. Although a good deal of research has investigated the motivations for goodwill writeoff, our study is the first to analyze whether these motivations vary across countries with different accounting systems. We find that firms that expect low cash flows in the future are more likely to report goodwill write-offs if they are located in countries with an Anglo-Saxon accounting system than if they are located in countries with a Continental accounting system. These results suggest that IFRS are "interpreted" differently in different countries and that harmonization of financial statements has not been fully achieved yet.

Sign in / Sign up

Export Citation Format

Share Document