إدارة الأرباح المحاسبية من خلال المستحقات الاختيارية : دراسة استكشافية للشركات المدرجة في بورصة الجزائر = Earnings Management through Discretionary Accruals : An Exploratory Study of Algerian Listed Companies

PurposeThis paper aims to consider data for listed companies in Bahrain Bourse to determine whether companies practice earnings management (EM). Further, the effect of a set of corporate governance characteristics on EM practices is examined.Design/methodology/approachThe EM level was measured using discretionary accruals (DA) [calculated using the Modified Jones (1995) Model]. The study sample consisted of 20 companies listed during the period 2011-2015. Panel regression model was used to test the study hypotheses and achieve the study aims.FindingsEM is negatively correlated with board size, confirming that a larger board is associated with a lower level of EM practices. Further, board independence is positively correlated with EM, suggesting that the larger the number of independent directors, the higher the level of EM practices. In addition, internal ownership is positively related to EM, confirming that the higher level of internal ownership increases EM practices. CEO duality does not appear to have any effect on EM in Bahrain Bourse. More interestingly, the findings reveal that companies practice EM through income-increasing DA.Research limitations/implicationsFinancial data and data related to other corporate governance characteristics are lacking.Practical implicationsThe results of this study provide empirical support for the development of new regulations and amendments and necessary corrective decisions regarding the effectiveness of applying corporate governance code in Bahrain Bourse. More specifically, this study reveals an urgent need for new amendments to restrict EM practices in Bahrain Bourse.Originality/valueThis study enriches the EM literature by covering Bahrain as an Asian country, which has not been sufficiently examined in relation to this topic. Further, this study provides a clear picture of the level of EM practices in Bahrain Bourse to multiple parties.

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EARNINGS MANAGEMENT TO ACHIEVE BENCHMARK TARGETS: A CASE OF SERBIAN LISTED COMPANIES

Management Control Review ◽

10.51720/mcr.v5i1.3397 ◽

2020 ◽

Vol 5 (1) ◽

pp. 2-18

Author(s):

Awidat Marai ◽

Vladan Pavlovic ◽

Goranka Knezevic ◽

Yousf Almahrog

Keyword(s):

Earnings Management ◽

Empirical Evidence ◽

Listed Companies ◽

Discretionary Accruals ◽

Alternative Methods ◽

Reported Earnings

The aim of this study is to investigate whether and how Serbian companies manage earnings to avoid losses and to avoid earnings decreases. The empirical evidence found in this study shows that there is a discontinuity in the distribution of reported earnings around the zero earnings benchmark suggesting that Serbian companies engage in earnings management to avoid reporting losses. Furthermore, this continuity disappears when we subtracted discretionary accruals from reported earnings indicating that Serbian companies use discretionary accruals as a tool for earnings management. However, the distribution of earnings does not provide evidence that Serbian companies manage earnings to avoid earnings decreases. These results are robust to alternative methods of scaling earnings and various ways of estimating discretionary accruals.

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EARNINGS MANAGEMENT AND DIVIDEND POLICY OF SMALL AND MEDIUM ENTERPRISES IN THAILAND1

International Journal of Business and Society ◽

10.33736/ijbs.527.2016 ◽

2017 ◽

Vol 17 (2) ◽

Author(s):

Supachet Chansarn ◽

Thanyakorn Chansarn

Keyword(s):

Earnings Management ◽

Dividend Policy ◽

Small And Medium Enterprises ◽

Earnings Quality ◽

Listed Companies ◽

Discretionary Accruals ◽

Dividend Yield ◽

Absolute Term ◽

Percent Increase ◽

Medium Enterprises

This study aims to examine earnings management of 51 small and medium enterprises listed inMarket for Alternative Investment (MAI) of Thailand during 2005 – 2012. Earnings managementin this study is measured by discretionary accruals based on Kasznik Model (Kasznik, 1999) andKothari Model (Kothari et al., 2005). Additionally, this study also investigates the influence ofearnings management on dividend policy of these companies which are measured bytwo indicators, including dividend payout ratio and dividend yield, by employing fixed andrandom effects regression analyses. The findings reveal that listed companies in MAI had highearnings management due to high average discretionary accruals in absolute term whichequalled 11.91 percent of total assets based on Kasznik Model and 12.55 percent of total assetsbased on Kothari Model. Moreover, earnings management is found to have the positive influenceon dividend yield of listed companies in MAI. That is, one percent increase in discretionaryaccruals in absolute term as percentage of total assets will lead to about 0.2 percent increasein dividend yield. In contrast, earnings management is found to have no influence on dividendpayout ratio.Keywords: Earnings Management; Earnings Quality; Dividend Policy; SMES; Market forAlternative Investment; Thailand.

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Earnings benchmarks, earnings management and future stock performance of Chinese listed companies reporting under ASBE-IFRS

Asian Review of Accounting ◽

10.1108/ara-10-2016-0112 ◽

2017 ◽

Vol 25 (4) ◽

pp. 502-525 ◽

Cited By ~ 5

Author(s):

Camillo Lento ◽

Wing Him Yeung

Keyword(s):

Earnings Management ◽

Listed Companies ◽

Discretionary Accruals ◽

Ordinary Least Squares ◽

Stock Performance ◽

Content Type ◽

Listed Firms ◽

Chinese Listed Companies ◽

Earnings Benchmarks ◽

Earnings Change

Purpose Prior literature has revealed three key earnings benchmarks: earnings level; earnings change; and analysts’ expectations. The purpose of this paper is twofold. First, the authors seek to establish which earnings benchmark induces the largest extent of earnings management. Second, the authors explore the implications of earnings management on firm future performance. Both of these purposes are investigated for Chinese listed companies during China’s IFRS/ISA reporting era. Design/methodology/approach The authors rely upon the unique regulations and incentives for Chinese listed companies in order to develop four testable hypotheses. Next, the authors employ both logistic and ordinary least squares regressions to test the hypotheses. Findings The results suggest that Chinese listed firms have the highest level of income increasing discretionary accruals around the earnings level benchmark, followed by the earnings change benchmark. The authors do not find any evidence of earnings management to beat analysts’ expectation. In addition, the authors find evidence that Chinese listed firms with relatively high level of earnings management and low earnings exhibit relatively weak future stock performance. Originality/value The findings are the first to document an earnings management benchmark hierarchy with respect to the extent of income increasing discretionary accruals, while simultaneously establishing a link between earnings management and firm future stock performance, for Chinese listed companies. The findings are valuable for regulators and investors by suggesting that management intervention in the reporting process during China’s IFRS/ISA reporting era may act to circumvent delisting regulations and cloud earnings signal for firms that beat certain earnings benchmarks.

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Earnings management and economic crises in the brazilian capital market

Revista de Administração de Empresas ◽

10.1590/s0034-759020140303 ◽

2014 ◽

Vol 54 (3) ◽

pp. 268-283 ◽

Cited By ~ 10

Author(s):

Aldy Fernandes da Silva ◽

Elionor Farah Jreige Weffort ◽

Eduardo da Silva Flores ◽

Glauco Peres da Silva

Keyword(s):

Earnings Management ◽

Economic Crisis ◽

Capital Market ◽

Regression Models ◽

Listed Companies ◽

Discretionary Accruals ◽

Economic Crises ◽

Significant Relation ◽

Dummy Variable ◽

Macroeconomic Factor

The 2008 economic crisis challenged accounting, either demanding recognition and measurement criteria well adjusted to this scenario or even questioning its ability to inform appropriately entities' financial situation before the crisis occurred. So, our purpose was to verify if during economic crises listed companies in the Brazilian capital market tended to adopt earnings management (EM) practices. Our sample consisted in 3,772 firm-years observations, in 13 years - 1997 to 2009. We developed regression models considering discretionary accruals as EM proxy (dependent variable), crisis as a macroeconomic factor (dummy variable of interest), ROA, market-to-book, size, leverage, foreign direct investment (FDI) and sector as control variables. Different for previous EM studies two approaches were used in data panel regression models and multiple crises were observed simultaneously. Statistics tests revealed a significant relation between economic crisis and EM practices concerning listed companies in Brazil in both approaches used.

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The interaction between real and accrual-based earnings management: analysis based on the mandatory IFRS adoption

International Journal of Accounting and Economics Studies ◽

10.14419/ijaes.v4i1.5721 ◽

2016 ◽

Vol 4 (1) ◽

pp. 24 ◽

Cited By ~ 4

Author(s):

Mouna Sellami

Keyword(s):

Earnings Management ◽

Management Strategies ◽

Listed Companies ◽

Discretionary Accruals ◽

Empirical Results ◽

Ifrs Adoption ◽

Real Activities Manipulation ◽

Sequential Nature

<p>The main purpose of this paper is to examine the relation between real and accrual-based earnings management after the mandatory IFRS adoption. I focus on a sample of 124 firms drawn from the 250 French-listed companies during the period from 1999 to 2011. Empirical results indicate that French firms use real activities manipulation and discretionary accruals as complementary tools to smooth earnings. Finally, unlike previous studies, I don’t find evidence of the sequential nature between the two earnings management strategies.</p>

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ARE CORPORATE SOCIAL RESPONSIBILITY ACTIVE FIRMS LESS INVOLVED IN EARNINGS MANAGEMENT? EMPIRICAL EVIDENCE FROM CHINA

Verslas teorija ir praktika ◽

10.3846/btp.2021.14940 ◽

2021 ◽

Vol 22 (2) ◽

pp. 504-516

Author(s):

Oleh Pasko ◽

Fuli Chen ◽

Nelia Proskurina ◽

Rong Mao ◽

Viktoriia Gryn ◽

...

Keyword(s):

Corporate Social Responsibility ◽

Social Responsibility ◽

Earnings Management ◽

Financial Reporting ◽

Listed Companies ◽

Discretionary Accruals ◽

Earning Management ◽

Significant Positive Association ◽

Chinese Listed Companies ◽

Corporate Social

This paper investigates whether corporate social responsibility active (CSR active) firms operate dissimilarly from other firms in their financial reporting. Specifically, we examine whether the corporate social responsibility (CSR) attitude of a firm sways its reporting incentives, in respect of the extent of earning management. To test our predictions, we use a sample of 25,861 year-company observations, corresponding to 3538 Chinese listed companies, for the period 2009–2019. We find a significant positive association between CSR activity and earning management assessed by the level of discretionary accruals in Chinese listed companies. Moreover, we document that Chinese CSR active firms engage more in earnings management through discretionary accruals than CSR inactive firms. These findings are consistent with the opportunistic financial reporting hypothesis: advances in CSR used by managers to safeguard their position by evading scrutiny from stakeholder activists. This study contributes to the growing awareness among investors, stakeholders and researchers that we should distinguish between CSR active firms and socially responsible firms and that being the latter entail something more than just mechanically produce CSR reports.

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Earnings Management and Mergers and Acquisitions

International Financial Reporting Standards and New Directions in Earnings Management - Advances in Finance, Accounting, and Economics ◽

10.4018/978-1-5225-7817-8.ch004 ◽

2019 ◽

pp. 77-100

Author(s):

Raffaela Casciello ◽

Adele Caldarelli ◽

Marco Maffei

Keyword(s):

Mergers And Acquisitions ◽

Earnings Management ◽

Financial Market ◽

Management Practices ◽

Market Competition ◽

Listed Companies ◽

Discretionary Accruals ◽

Financial Reports ◽

Business Combinations ◽

Discretionary Accrual

This chapter investigates whether Italian-listed companies involved in mergers and acquisitions (M&A) during the period 2009–2017 manipulated earnings through recourse to discretionary accruals in response to financial market competition. Interest in the possible effects of competition on earnings management practices follows the considerable attention attracted by the effects of business combinations on disclosure quality and reliability. M&A represents an opportunity for managers to manipulate financial reports and to deliver misleading market information in order to enhance company reputation and attract funds from investors. This empirical analysis demonstrates that Italian-listed companies involved in M&A used goodwill as a discretionary accrual for managing earnings. The findings indicate that the increasing level of financial market competition between Italian-listed companies prompted major recourse to earnings management practices based on discretionary accruals.

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