Antitrust Merger Investigations And The Quality Of Reported Earnings

Purpose Although board interlocking underlying forces are largely hidden, the purpose of this paper is to provide managers, auditors, analysts, regulators and other stakeholders with sociological board interlocking information considering the different backgrounds of their members. Design/methodology/approach The research sample gathered 1,606 observations from 2010 to 2017. For data analysis, the direct and indirect board interlocking linkages, considering the different backgrounds of board members, established the centrality indicators. Subsequently, the authors used these indicators according to each measured background in the regression models. Findings The results indicate that the political background of board interlocking members is positively related to real earnings management practices, while the financial background has a mitigating effect on such practices. Research limitations/implications The findings suggest that individual skills and interests conveyed across the corporate social network have shaped corporate governance, with distinct impacts on the quality of accounting information. Practical implications The authors conclude that both backgrounds could have implications on agency conflicts, increasing (policy) or reducing (financial) information asymmetry between the company and its various stakeholders, which indicates that the authors must consider sociological and not just economic aspects within corporate governance. Social implications The sociological background of individuals is necessary for the congruence of monitoring mechanisms, and consequently, the quality of accounting information. Originality/value This study examines the influence of the political and financial background of board interlocking members on real earnings management practices in Brazilian publicly traded companies in the International Financial Reporting Standards post-adoption period.

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Information Content of Earnings Managements: Implications on Growth and Value Companies

Journal of Accounting and Finance in Emerging Economies ◽

10.26710/jafee.v2i1.73 ◽

2016 ◽

Vol 2 (1) ◽

pp. 47-56

Author(s):

Windu Mulyasari ◽

Slamet Sugiri ◽

Heyvon Herdhayinta

Keyword(s):

Earnings Management ◽

Information Content ◽

Market Price ◽

Accounting Information ◽

Future Earnings ◽

Cycle Growth ◽

Incremental Information ◽

Growth Firms ◽

Management Behaviors

Objective: The purpose of this study is to investigate the pattern of earnings management on growth and value companies in Indonesia. This study predicts that earnings management has information contents. Therefore, earnings management tends to degrade the quality of earnings, then affect the future profitability. This study analyzes the effect of earnings management information content to the company's future profitability. This study provides an understanding about accounting information at certain market price levels for growth and value companies. Findings: Findings of this study indicate the differences between earnings management influence on growth and value companies. The results also support the differences of relative incremental information content of earnings management on growth and value companies. The growth firms tend to do earnings management and have higher profitability compared to the value firms. The implication is that the incremental information content of earnings management on growth firms is lower than those of the value firms to predict future profitability. Implication: The contribution of this research is to provide an in-depth review on earnings management study associated with company life cycle (growth and value), as well as to give additional understanding about the existence of incremental information content of earnings management. Thus, firms show different earnings management behaviors and ultimately those behaviors affect the quality of profit to predict future earnings

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Board Quality and Earnings Management: Evidence from India

Global Business Review ◽

10.1177/0972150919856958 ◽

2019 ◽

Vol 21 (5) ◽

pp. 1302-1324 ◽

Cited By ~ 1

Author(s):

Chanchal Chatterjee

Keyword(s):

Earnings Management ◽

Emerging Market ◽

Institutional Ownership ◽

Board Independence ◽

Management Behaviour ◽

Foreign Institutional Investors ◽

Independence Results ◽

Set Up ◽

Reported Earnings

This article examines whether board qualities influence the earnings management behaviour of firms in a large emerging market set-up by using panel data of 783 Indian private manufacturing firms over a period of 7 years (April 2009–March 2016). The study finds that it is board quality that helps in curbing earnings manipulation and not just board independence. Results reveal that diligent and busy boards help in reducing earnings management, CEO duality affects the quality of reported earnings and promoters’ influence on boards increases earnings management. Domestic or foreign institutional investors do not have any independent impact on earnings management. However, domestic institutional ownership reduces earnings management when promoters’ influence exists. The article contributes to the literature by focusing on whether corporate governance (CG) mechanisms are important in curbing earnings management in an emerging market context. The findings are expected to be helpful to policymakers and regulators while framing appropriate CG policies and regulations.

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Impact of Macro and Micro Governance Structures on Earnings Management

10.26686/wgtn.17011163.v1 ◽

2021 ◽

Author(s):

◽

Muhammad Nurul Houqe

Keyword(s):

Earnings Management ◽

Earnings Quality ◽

Discretionary Accruals ◽

Institutional Setting ◽

Strong Impact ◽

Legal Enforcement ◽

Micro Level ◽

Reported Earnings ◽

Macro Variables

This study examines the macro and micro level determinants of the quality of reported earnings. The prior literature suggests that both micro and macro variables impact on discretionary accruals choice in managing earnings. However, most of the studies on earnings management have been single country studies that have focussed only on micro variables as all firms within the samples examined have been subject to the same interplay of macro economic, legal, cultural and institutional frameworks. This study addresses this gap in the literature by using a sample of 156,906 firm year observations from 63 countries over the period 1998-2007 to examine the role of thirteen micro and macro variables in determining earnings quality. The macro variables studied include legal enforcement, political system, and control of corruption, culture and adoption of IFRS. Earnings management is estimated using the modified Jones model (Dechow et al. 1995) in a cross section (DeFond and Jiambalvo 1994; Francis et al. 1998). The results of the study indicate that macro and micro level variables have a strong impact on earnings management behaviour and thus earnings quality. The limits imposed by a country's legal, cultural and institutional setting on managerial discretionary accruals choices, strongly impact the quality of reported earnings. Future research on earnings management should therefore control both micro and macro level variables.

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Impact of Macro and Micro Governance Structures on Earnings Management

10.26686/wgtn.17008534 ◽

2021 ◽

Author(s):

◽

Muhammad Nurul Houqe

Keyword(s):

Earnings Management ◽

Earnings Quality ◽

Discretionary Accruals ◽

Institutional Setting ◽

Strong Impact ◽

Legal Enforcement ◽

Micro Level ◽

Reported Earnings ◽

Macro Variables

This study examines the macro and micro level determinants of the quality of reported earnings. The prior literature suggests that both micro and macro variables impact on discretionary accruals choice in managing earnings. However, most of the studies on earnings management have been single country studies that have focussed only on micro variables as all firms within the samples examined have been subject to the same interplay of macro economic, legal, cultural and institutional frameworks. This study addresses this gap in the literature by using a sample of 156,906 firm year observations from 63 countries over the period 1998-2007 to examine the role of thirteen micro and macro variables in determining earnings quality. The macro variables studied include legal enforcement, political system, and control of corruption, culture and adoption of IFRS. Earnings management is estimated using the modified Jones model (Dechow et al. 1995) in a cross section (DeFond and Jiambalvo 1994; Francis et al. 1998). The results of the study indicate that macro and micro level variables have a strong impact on earnings management behaviour and thus earnings quality. The limits imposed by a country's legal, cultural and institutional setting on managerial discretionary accruals choices, strongly impact the quality of reported earnings. Future research on earnings management should therefore control both micro and macro level variables.

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The Impact of IFRS Adoption on Earnings Management Activities and Value Relevance of Accounting Information: Applied Study

International Journal of Business Ethics and Governance ◽

10.51325/ijbeg.v1i3.18 ◽

2018 ◽

Vol 1 (3) ◽

pp. 11-42

Author(s):

Mohamed Ibrahim Mohamed Hessian

Keyword(s):

Earnings Management ◽

Financial Reporting ◽

Value Relevance ◽

Accounting Information ◽

Discretionary Accruals ◽

Economic Benefits ◽

Financial Reporting Standards ◽

Study Results ◽

The Impact

This study focused on the economic benefits of adoption of IFRS. More specifically, this study emphasis on whether the quality of the accounting information has been improved after the adoption of IFRS. The study investigated quality of accounting information through two main variables: earnings management and the value relevance of accounting information. The study was applied on 56 Egyptian listed companies during the period from 1997 to 2011, which divided into two periods: the period after the adoption of the standards from 2007 to 2011, and before the adoption of the International Financial Reporting Standards from 1997 to 2006. The research concluded that there is a significant impact of the adoption of IFRS on managerial opportunities to manage earnings using discretionary accruals, which is reflected in the lower value relevance of accounting information. Study results also indicate that companies with high leverage are the lowest companies in the value relevance of accounting information, and that companies that are subject to private sector law No. 159 of 1981 are the most companies engaged in earnings management activities through discretionary accruals, large size companies, without any significant impact on future growth opportunities and listing on global exchanges.

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Influência do refazimento das demonstrações contábeis no gerenciamento de resultados das empresas listadas na BM&FBovespa

RACE - Revista de Administração Contabilidade e Economia ◽

10.18593/race.v16i1.7305 ◽

2017 ◽

Vol 16 (1) ◽

pp. 95-120

Author(s):

Paulo Roberto da Cunha ◽

Leonardo Barbi Fernandes ◽

Cristian Bau Dal Magro

Keyword(s):

Earnings Management ◽

Accounting Information ◽

Financial Statements ◽

Discretionary Accruals ◽

Management Quality ◽

Quality Of Accounting Information ◽

Survey Sample ◽

Quantitative Nature ◽

Negative Earnings

A qualidade da informação contábil é essencial para os stakeholders, e a prática de gerenciamento de resultado é uma medida de qualidade da informação. Atrelada a isso, a Comissão de Valores Mobiliários (CVM) solicita a republicação das demonstrações contábeis sempre que julgar necessário. Contudo, no ato da republicação das demonstrações contábeis pode haver diferentes julgamentos em relação às escolhas contábeis por parte dos gestores, ocasionando modificações no nível de gerenciamento de resultados das organizações e assimetria informacional entre o principal e o agente. Desse modo, o objetivo com este estudo foi verificar a influência do refazimento das demonstrações contábeis no gerenciamento de resultados das empresas listadas na BM&FBovespa. A análise ocorreu no período pré-refazimento, ano do refazimento e pós-refazimento. Realizou-se uma pesquisa descritiva, documental e com abordagem de cunho quantitativo. A amostra da pesquisa foi composta por 18 empresas com refazimento das demonstrações contábeis entre 1995 e 2012, e para fins de comparação foram selecionadas 18 empresas sem refazimento listadas na BM&FBovespa que continham similaridades em relação ao tamanho e ao setor de atuação. Os resultados não revelam diferenças quanto à média dos accruals discricionários entre os períodos pré-refazimento, ano do refazimento e pós-refazimento. Por outro lado, os resultados em comparação com as empresas que não foram obrigadas ao refazimento das demonstrações contábeis revelam que o refazimento influencia o gerenciamento de resultado negativo. Diante das variáveis testadas, verificou-se que o endividamento influencia o gerenciamento de resultado negativo e que o tamanho da empresa influencia o gerenciamento de resultado positivo.Palavras-chave: Refazimento das demonstrações contábeis. Gerenciamento de resultados. Qualidade da informação contábil. Abstract The quality of accounting information is essential for stakeholders and the practice of earnings management is a measure of quality of the information. Coupled to this, the Brazilian Securities Commission (CVM) requests the republication of the financial statements whenever necessary. However, upon republication of the financial statements may be different judgments about the financial choices by managers, resulting in changes in the level of earnings management organizations and informational asymmetry between the principal and the agent. Thus, the objective with this study was to investigate the influence of the restatement of financial statements in earnings management of companies listed on BM&FBovespa. The analysis took place in the pre-restatement period, the year of restatement and post-restatement. We conducted a descriptive, documentary, with quantitative nature approach. The survey sample consisted of 18 companies with restatement of financial statements from 1995 to 2012 and for comparison 18 companies without restatement listed on BM&FBovespa containing similarities in the size and sector of activity were selected. The results did not reveal differences from the average of discretionary accruals between the periods of pre-restatement, year of restatement and post-restatement. On the other hand, the results compared to companies that were not required to restate the financial statements reveal that the restatement influences the negative earnings management. Before the variables tested, it was found that the debt influences the negative earnings management and company size influences the positive earnings management.Keywords: Restatement of financial statements. Earnings management. Quality of accounting information.

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An analysis of the effect of board characteristics and governance indices on the quality of accounting information

Journal of Governance and Regulation ◽

10.22495/jgr_v3_i3_c1_p4 ◽

2014 ◽

Vol 3 (3) ◽

pp. 104-119

Author(s):

Raef Gouiaa ◽

Daniel Zéghal

Keyword(s):

Earnings Management ◽

Board Of Directors ◽

Boards Of Directors ◽

Accounting Information ◽

Accounting Conservatism ◽

The Other ◽

Academic Governance ◽

Board Characteristics ◽

Quality Of Accounting Information

The objective of this study is to examine the effect on the quality of accounting information published by Canadian firms of board of directors’ characteristics compared to that of governance indices that measure board quality. We find that the majority of board characteristics have an important and significant effect on the levels of earnings management and accounting conservatism. On the other hand, in the case of the studied attributes of the quality of accounting information, we find that the effect of governance indices that assess the quality of boards of directors is not clearly established. Particularly, our results reveal that individual measures of the characteristics of boards of directors allow for a better detection and explanation of the quality of accounting information than do multi-factor commercial and academic governance indices.

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Impact of Macro and Micro Governance Structures on Earnings Management

10.26686/wgtn.17008534.v1 ◽

2021 ◽

Author(s):

◽

Muhammad Nurul Houqe

Keyword(s):

Earnings Management ◽

Earnings Quality ◽

Discretionary Accruals ◽

Institutional Setting ◽

Strong Impact ◽

Legal Enforcement ◽

Micro Level ◽

Reported Earnings ◽

Macro Variables

This study examines the macro and micro level determinants of the quality of reported earnings. The prior literature suggests that both micro and macro variables impact on discretionary accruals choice in managing earnings. However, most of the studies on earnings management have been single country studies that have focussed only on micro variables as all firms within the samples examined have been subject to the same interplay of macro economic, legal, cultural and institutional frameworks. This study addresses this gap in the literature by using a sample of 156,906 firm year observations from 63 countries over the period 1998-2007 to examine the role of thirteen micro and macro variables in determining earnings quality. The macro variables studied include legal enforcement, political system, and control of corruption, culture and adoption of IFRS. Earnings management is estimated using the modified Jones model (Dechow et al. 1995) in a cross section (DeFond and Jiambalvo 1994; Francis et al. 1998). The results of the study indicate that macro and micro level variables have a strong impact on earnings management behaviour and thus earnings quality. The limits imposed by a country's legal, cultural and institutional setting on managerial discretionary accruals choices, strongly impact the quality of reported earnings. Future research on earnings management should therefore control both micro and macro level variables.

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