What do Analysts Really Predict? Inferences from Earnings Restatements and Managed Earnings

Earnings Restatements and Credit Default Swaps

SSRN Electronic Journal ◽

10.2139/ssrn.2140134 ◽

2012 ◽

Author(s):

Xiaoling Pu ◽

Tzveta Vateva

Keyword(s):

Credit Default Swaps ◽

Earnings Restatements ◽

Credit Default

An empirical investigation of earnings restatements by Australian firms

Accounting and Finance ◽

10.1111/j.1467-629x.2006.00196.x ◽

2007 ◽

Vol 47 (1) ◽

pp. 1-22 ◽

Cited By ~ 25

Author(s):

Kamran Ahmed ◽

John Goodwin

Keyword(s):

Empirical Investigation ◽

Earnings Restatements

The Reputational Penalty for Aggressive Accounting: Earnings Restatements and Management Turnover

SSRN Electronic Journal ◽

10.2139/ssrn.471842 ◽

2004 ◽

Cited By ~ 11

Author(s):

Hemang Desai ◽

Chris E. Hogan ◽

Michael S. S. Wilkins

Keyword(s):

Management Turnover ◽

Accounting Earnings ◽

Earnings Restatements ◽

Aggressive Accounting

The Impact of CEO Compensation On the Timing of Earnings Restatements

SSRN Electronic Journal ◽

10.2139/ssrn.1989215 ◽

2011 ◽

Author(s):

Nourhene BenYoussef

Keyword(s):

Ceo Compensation ◽

Earnings Restatements ◽

The Impact

A Probability Model For Earnings Restatement

Journal of Business & Economics Research (JBER) ◽

10.19030/jber.v10i11.7358 ◽

2012 ◽

Vol 10 (11) ◽

pp. 593

Author(s):

Abdoulaye Dabo ◽

Judith A. Laux

Keyword(s):

Cash Flow ◽

Probability Model ◽

Net Income ◽

Turnover Rates ◽

Font Size ◽

Return On Assets ◽

Earnings Restatements ◽

Accounts Receivable ◽

Earnings Restatement ◽

Operating Cash Flow

Given their prevalence in recent years, earnings management and financial restatements have been at the center of much of the discussion surrounding corporate malfeasance. This study builds a probability model for predicting the likelihood of earnings restatements by analyzing the trends in and the deviations from the industry averages of the return on assets, accounts receivable turnover, net profit margin, and operating cash flow to net income measures. Data are obtained for a sample of 104 firms (restating as well as non-restating) for the 2000 to 2001 period. The results suggest that deviations from the industry average of the accounts receivable turnover and the variability in the cash flow to net income provide good barometers for detecting fraudulent accounting. Potential restating firms have higher accounts receivable turnover rates than their industry counterparts and downward trends in their cash flow to net income, so an increase (decrease) in the accounts receivable turnover (operating cash flow to net income) significantly increases the likelihood of a restatement, at least in the current study.

Tone Management

The Accounting Review ◽

10.2308/accr-50684 ◽

2013 ◽

Vol 89 (3) ◽

pp. 1083-1113 ◽

Cited By ~ 201

Author(s):

Xuan Huang ◽

Siew Hong Teoh ◽

Yinglei Zhang

Keyword(s):

Balance Sheet ◽

Cash Flows ◽

Stock Option ◽

Earnings Restatements ◽

Future Earnings ◽

Accruals Management ◽

Perception Management ◽

The One ◽

Return Effect ◽

Earnings Press Releases

ABSTRACT We investigate whether and when firms manage the tone of words in earnings press releases, and how investors react to tone management. We estimate abnormal positive tone, ABTONE, as a measure of tone management from residuals of a tone model that controls for firm quantitative fundamentals such as performance, risk, and complexity. We find that ABTONE predicts negative future earnings and cash flows, is positively associated with upward perception management events, such as, just meeting/beating thresholds, future earnings restatements, SEO, and M&A, and is negatively associated with a downward perception management event, stock option grants. ABTONE has a positive stock return effect at the earnings announcement and a delayed negative reaction in the one and two quarters afterward. Balance sheet constrained firms and older firms are more likely to employ tone management over accruals management. Overall, the evidence is consistent with managers using strategic tone management to mislead investors about firm fundamentals.

An Empirical Assessment of Alternative Discretionary Accrual Models: Evidence from Earnings Restatements

Accounting and Finance Research ◽

10.5430/afr.v7n4p138 ◽

2018 ◽

Vol 7 (4) ◽

pp. 138

Author(s):

Huishan Wan

Keyword(s):

Earnings Management ◽

Two Dimensions ◽

Relative Performance ◽

The Other ◽

Management Research ◽

Management Behavior ◽

Earnings Restatements ◽

Discretionary Accrual ◽

Restated Earnings ◽

Forward Looking

Using a sample of firms that restated earnings, this study seeks to evaluate the performance of alternative discretionary accrual models along two dimensions: earnings management detection and accuracy (the ability to accurately estimate the magnitude of managed earnings). The findings of this study are important for three reasons. First, discretionary accrual models play a prominent role in several streams of accounting research, especially in earnings management research. Thus, the ability of discretionary accrual models to isolate the discretionary component from the non-discretionary component of total accruals is critical. Second, there is concern about earnings management inferences drawn from discretionary accrual estimates generated by existing discretionary accrual models. One major concern is that extant discretionary accrual models are mis-specified, which results in misleading inferences about earnings management behavior. Finally, there is lack of consensus in the literature on the relative performance of discretionary accrual models. Using earnings restatements data, I investigate the relative performance of four extant discretionary accrual models and a Modified Forward-Looking Model. The findings indicate that the Modified Forward-Looking Model is better specified and outperforms the other models both in terms of detecting earnings management and in estimating the magnitude of managed earnings.

CEO turnover around earnings restatements and fraud

Pacific Accounting Review ◽

10.1108/01140581011091666 ◽

2010 ◽

Vol 22 (3) ◽

pp. 180-198 ◽

Cited By ~ 13

Author(s):

Judy K. Land

Keyword(s):

Ceo Turnover ◽

Earnings Restatements

Labor market penalties from past earnings restatements

Management Research Review ◽

10.1108/01409171011030417 ◽

2010 ◽

Vol 33 (3) ◽

pp. 269-277

Author(s):

R. Steven Flynn

Keyword(s):

Labor Market ◽

Earnings Restatements

Corporate Revenue Miscalculations & The Impact On Stakeholders

Journal of Business & Economics Research (JBER) ◽

10.19030/jber.v12i2.8521 ◽

2014 ◽

Vol 12 (2) ◽

pp. 77

Author(s):

Karen T. Cascini ◽

Alan DelFavero ◽

Ryan Bezner

Keyword(s):

Multinational Corporations ◽

Financial Reporting ◽

Multinational Firms ◽

Accounting Standards ◽

Shareholder Wealth ◽

Net Income ◽

Accounting Systems ◽

Generally Accepted Accounting Principles ◽

Earnings Restatements ◽

The Impact

Corporate earnings restatements are regarded as one of the most significant issues in accounting today. While there are various factors that can influence profitability, revenue is the key contributor to a business net income. During the 2000s, a multitude of domestic and multinational corporations faced significant issues with their revenue recognition practices. Although the investing public might regard any revenue restatement as laden with possible fraud, this is not always the case. Multinational firms face dual accounting systems, such as U.S. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS). Currently, similarities and differences between the accounting systems exist. However, key differences between GAAP and IFRS may cease to exist in upcoming years due to the Financial Accounting Standards Boards (FASBs) and the International Accounting Standards Boards (IASBs) joint effort to converge the two systems. Throughout this paper, examples of revenue miscalculations will be presented as well any penalties levied by the U.S. Securities & Exchange Commission against implicated corporations. Accordingly, the impact that revenue blunders have on shareholder wealth will be examined. Finally, the authors will present recommendations for mitigating revenue errors in the future.