scholarly journals Financial Factors Affecting Earnings Management and Earnings Quality: New Evidence from an Emerging Market

2020 ◽  
Vol 9 (1) ◽  
pp. 198-216
Author(s):  
Isam Saleh ◽  
Malik Abu Afifa ◽  
Fadi Haniah
Keyword(s):  
Earnings Management ◽  
Emerging Market ◽  
Earnings Quality ◽  
Panel Data Analysis ◽  
Insurance Companies ◽  
Policy Makers ◽  
Factors Affecting ◽  
Financial Factors ◽  
Study Population ◽  
New Evidence

The purpose of this study is to examine the effect of financial factors on earnings management and earnings quality. Moreover, the study examines the role of earnings management as a mediator in the effect of the financial factors on earnings quality. It provides some empirical evidences from an emerging market, especially from the Jordanian market. The study uses a panel data analysis method over a ten-year period (2009-2018). The study population includes all Jordanian insurance companies listed in Jordanian market at the end of the year 2019, and the study sample consists of 20 Jordanian insurance companies (a complete population), giving a total of 200 observations for each variable. The results indicate that all financial factors in the model combined affect the earnings management and earnings quality. In addition, earnings management negatively affects earnings quality, and earnings management fully mediates the effect of financial factors on earnings quality. The study advises that policy makers ought to follow good legislation to curb the company's earnings management activities. Hence, the policy makers need to apply regulations which enrich the company’s effectiveness and efficiency whilst protecting the investors and other interested parties from risk.

Abnormal disclosure tone, earnings management and earnings quality

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Heba Abou-El-Sood ◽  
Dalia El-Sayed
Keyword(s):  
Earnings Management ◽  
Impression Management ◽  
Value Relevance ◽  
Emerging Market ◽  
Earnings Quality ◽  
Valuable Insight ◽  
Mena Region ◽  
Content Type ◽  
Disclosure Tone ◽  
Earnings Smoothness

PurposeThe authors investigate whether abnormal tone in corporate narrative disclosures is associated with earnings management and earnings quality, in an emerging market context. Based on agency theory and opportunistic/impression management perspective, this study examines whether executives manage disclosure tone to support their opportunistic behavior, when using earnings management.Design/methodology/approachThis study uses a sample of earnings press releases of publicly traded firms in the MENA region during 2014–2019. It employs textual analysis to measure disclosure tone. The authors estimate abnormal disclosure tone after controlling for firm characteristics. Discretionary accruals proxy for earnings management and are estimated using Modified Jones model. Earnings quality is measured using accounting-based and market-based proxies: earnings smoothness, persistence, predictability and value relevance/informativeness.FindingsResults show a positive association between abnormal disclosure tone and earnings management. Additionally, results show that earnings persistence is higher for firms with lower levels of abnormal disclosure tone. Results are sustained for earnings smoothness, but not for predictability and value relevance/informativeness.Research limitations/implicationsResults provide initial evidence of management's use of tone management jointly with earnings management. This adds to prior studies adopting the opportunistic perspective of disclosure tone, through showing that discretionary tone in narrative disclosures can be strategically used by management to influence investors' perceptions.Practical implicationsThe results provide valuable insight to board of directors, auditors and market participants on the possible biases emerging from tone of narrative disclosures in corporate reports. For regulators and standard-setters, results shed light on the need for regulations and rules beyond financial statements, to guide disclosure of narrative information in different corporate reports.Originality/valueThis study contributes to the rare evidence that investigates textual disclosure characteristics to uncover management's opportunistic practices and assess earnings quality. Where majority of studies concentrate on developed markets, this study provides novel evidence of emerging markets by examining the association between abnormal disclosure tone and earnings management/earnings quality. Also, it validates the tone management model proposed by Huang et al. (2014) for capturing tone manipulation.

scholarly journals Environmental Taxation: New Evidence for Energy Taxes

2015 ◽  
Vol 13 (3-4) ◽  
pp. 101-115 ◽  
Author(s):  
Maja Grdinić ◽  
Maja Klun ◽  
Žiga Kotnik
Keyword(s):  
Direct Effect ◽  
Panel Data Analysis ◽  
Ghg Emissions ◽  
Green Economy ◽  
Environmental Taxes ◽  
Policy Makers ◽  
Eu Member States ◽  
Environmental Expenditures ◽  
New Evidence ◽  
The Eu

The intensity of exploitation of natural resources has increased over the past decades, making environmental protection policy one of the most important priorities of government institutions. Various economic instruments, including taxation, may help policy makers in the EU meet environmental targets, among them a more secure and competitive green economy in Europe. The focus of this paper is on empirically investigating the direct effect of environmental taxes and the indirect effect of environmental expenditures sourced from environmental taxes on greenhouse gas (GHG) emissions in the energy sector. The research applied the panel data analysis method to selected EU member states for the 1995–2010 period. The results show that the direct effect of environmental taxes on GHG emissions in the sector energy is statistically significant and negative. The indirect effects of environmental taxes resulting from environmental expenditures in the industrial and governmental sectors were found to be even stronger than the direct effect of taxes alone.

The link between CSR and earnings quality: evidence from Egypt

2019 ◽  
Vol 10 (1) ◽  
pp. 1-20
Author(s):  
Abobaker Mohmed ◽  
Antoinette Flynn ◽  
Colette Grey
Keyword(s):  
Earnings Management ◽  
Emerging Market ◽  
Earnings Quality ◽  
Positive Association ◽  
Quality Measures ◽  
Reverse Causality ◽  
Content Type ◽  
Theoretical Perspectives ◽  
Real Value ◽  
Corporate Social

Purpose The purpose of this paper is to investigate the relationship between corporate social responsibility (CSR) and earnings quality, as proxied by accrual earnings management, in Egyptian firms. This research is conducted in a bidirectional fashion using simultaneous equations and considers two theoretical perspectives. Design/methodology/approach The study employs CSR annual scores from the Egyptian environmental, social and governance index (S&P/ESG index) for the 100 highest scoring firms from 2007 to 2015. It utilizes three earnings quality measures, in addition to considering reverse causality and endogeneity. Findings The results indicate that CSR has a positive association with earnings quality only in the top CSR scoring firms (top 30 ranked firms according to the index). Engaging in CSR in such firms enhances the quality of their earnings. This suggests that firms with relatively lower CSR scores (bottom 70 ranked firms according to the index) may use CSR to “greenwash” weaker earnings. Research limitations/implications The findings suggest that researchers, analysts and policy makers should consider earnings quality when estimating the real value of a firm’s CSR score. In particular, the Egyptian S&P/ESG index committee could further develop the index by incorporating earnings quality measures. Originality/value The study contributes to the literature by exploring in-depth the causal relationship between CSR practices and accrual earnings management in an emerging market. The results provide a nuanced story of CSR practices, with accruals earnings management (earnings quality) acting as a mediator of CSR’s inherent value.

scholarly journals Earnings quality measurements and determinants: the case of listed firms in Vietnam

2021 ◽  
Author(s):  
Hieu Pham Minh ◽  
Quyen Nguyen Do
Keyword(s):  
Earnings Management ◽  
Earnings Quality ◽  
Panel Data Analysis ◽  
Firm Characteristics ◽  
Firm Age ◽  
Listed Firms ◽  
Accruals Quality ◽  
Effect Regression ◽  
Negative Impacts

The study aims to review different measurements of earnings quality and investigate its determinants which are mainly derived from firm characteristics of Vietnamese listed companies from 2011 to 2019. Panel data analysis is implemented, and fixed-effect regression is employed along with post-estimation tests to achieve robust findings. The research results indicate that dividend yield and firm size are positively related to earnings quality while financial leverage, growth, profitability, and accounting losses have negative impacts on earnings quality. Meanwhile, firm age as well as the Circular 200 have positive partial impact on the quality of earnings of listed firms in Vietnam. Keywords: Earnings management, Earnings quality, Accruals quality

Employee Motivation: An Indian Perspective

2021 ◽  
Vol 9 (3) ◽  
Author(s):  
Madhu Arora ◽  
Laxmi Rani ◽  
Vibhuti Tyagi
Keyword(s):  
Driving Force ◽  
Employee Motivation ◽  
Demographic Variables ◽  
Motivating Factors ◽  
Policy Makers ◽  
Factors Affecting ◽  
Financial Factors ◽  
Financial Factor ◽  
Initial Stage ◽  
Indian Perspective

Motivation is the driving force which stimulates an individual to take action and sustains that behaviour. In the initial stage, only money was considered as a factor of motivation but there are many other factors also which motivates the individuals. The importance of these factors of motivation varies from person to person. Some people prefer financial factors while some people prefer non-financial factor. Present research aimed at identifying preference of factors affecting motivation of employees working in various Indian Enterprises and impact of demographic factors on the factors of motivation. Study was conducted with the help of questionnaire for this research. The questionnaire consisted of two parts: Part (A) and Part (B). The questionnaire was prepared on the basis of ten factors of motivation, Participants were asked to give the ranking to the factors of motivation on the basis of their importance. Relationship between motivational factors and demographic variables were established with the help of T test and ANOVA. The motivating factors were taken with the help of literature review. This research is supposed to provide useful directions to managers and other policy makers in developing employee motivation policies.

scholarly journals The Effects of International Financial Reporting Standards on Reporting Quality of Financial Institutions in Ghana

2020 ◽  
Vol 10 (2) ◽  
pp. 94
Author(s):  
Edmond Amissah ◽  
Paul Hammond ◽  
Reginald Djimatey
Keyword(s):  
Earnings Management ◽  
Financial Institutions ◽  
Financial Reporting ◽  
Emerging Market ◽  
Reporting Quality ◽  
Insurance Companies ◽  
Reporting Standard ◽  
Ifrs Adoption ◽  
The Impact

This study sought to examine the reporting quality of financial institutions in Ghana after adopting International Financial Reporting Standard (IFRS) as its official national reporting standard. Using a fixed effect logistic regression, the study compares the earnings management of banks and insurance firms before and after IFRS adoption on reporting quality. The data used was drawn from 51 financial institutions made up of 23 universal banks and 28 insurance companies observed over the period 2003 to 2014. The empirical results indicate that financial institutions exhibit more earnings management during the post-adoption era which is interpreted as a decline in the quality of financial reporting among financial institutions in Ghana. The results documented in this study add to the dearth of literature and contributes to the debate on IFRS adoption and its related impact on reporting quality (earnings management) among financial institutions from the perspective of an emerging market. The study is unique in the sense that it includes the insurance industry where the literature is largely silent especially, on the impact of IFRS adoption by countries on the African continent. Furthermore, unlike previous studies, this paper considers both listed and non-listed firms.

scholarly journals Does industry expertise at engagement partner and audit firm level matter in emerging market? Evidence from Indonesia

Accounting ◽  
2021 ◽  
pp. 951-964 ◽  
Author(s):  
Antonius Herusetya ◽  
Meiliana Jaunanda
Keyword(s):  
Earnings Management ◽  
Capital Market ◽  
Audit Quality ◽  
Emerging Market ◽  
Firm Level ◽  
Policy Makers ◽  
Industry Specialization ◽  
Audit Opinion ◽  
Audit Firm

This study investigates the association of industry specialization at the engagement partner level and audit firm level with aggressive earnings management and modified audit opinion. The study employs a sample of 570 firm-year observations of manufacturing industries on the Indonesia Stock Exchange from 2014 to 2018 using a binary logistic regression model. First, this study finds no evidence of a relationship between industry specialization at the engagement partner level and audit firm level with aggressive discretionary accruals. Furthermore, the author finds evidence of a positive association between industry specialization at the audit firm level and aggressive real earnings management due to high audit quality. Finally, the study finds evidence that industry specialization at audit firm level is likely to issue modified audit opinion. This study contributes to the study of industry specialization at the engagement partner level and audit firm level, which is rarely performed in Indonesia. Policy makers and capital market players might learn some lessons from the audit quality of external auditors with industry specialists as the gatekeeper of the capital market. Moreover, this study has provided a valuable perspective to practitioners, researchers, and policy makers in other emerging markets regarding the quality of industry specialization at the partner and audit firm level.

Measurement of Vulnerability of Financial Portfolio of Sharia Commercial Banks by Cardona Method

2017 ◽  
Vol 9 (2) ◽  
pp. 109
Author(s):  
Paulina Harun ◽  
Atman Poerwokoesoemo
Keyword(s):  
Commercial Banks ◽  
Quantitative Research ◽  
Banking Sector ◽  
Banking Industry ◽  
Policy Makers ◽  
Factors Affecting ◽  
Section Data ◽  
Initial Stage ◽  
The Face ◽  
Asset Portfolio

his study aims to: (1) to know and analyze the extent of volatility (vulnerability) of sharia banking industry in Indonesia in the face of competition (2) to know and analyze factors affecting vulnerability of sharia commercial banks; (3) to know and analyze the extent of sustainable development of sharia banking industry to Indonesia's economic development.The research conducted to measure the vulnerability (volatility) of proto folio of syariah bank using observation period 2015, and the data used is cross section data. The research design used in this research is quantitative research, using asset dimension (asset portfolio, liability portfolio, equity portfolio) and stressor (pressure, including: credit risk, market risk, and liquidity risk).The activity plan of this research is: in the initial stage of conducting theoretical study related to the vulnerability related to banking especially BUS; The next step is to determine the asset and stressor dimensions associated with the BUS; Further determine the indicators related to assets and stressors; The next step performs calculations to determine the index of each BUS as well as the dimensions that affect the vulnerabilities faced by each BUS.Target expected outcomes can be generated from this research is: for the object of research (BUS) provide a solution for BUS to deal with and overcome the vulnerabilities encountered and policies that must be done. For policy makers, the results of this study are expected to provide input in decision-making and other policies.Measurement of vulnerability to be performed related to banking operations in the face of competition and the continuity of BUS in Indonesia. The outcomes of this study are expected to be included in Bank Indonesia journals, the selection of this journal is based on studies conducted in the banking sector, especially BUS in Indonesia.

PENGARUH EARNINGS MANAGEMENT TERHADAP EARNINGS QUALITY

2010 ◽  
Author(s):  
Pupun Tri Wahyuni ◽  
Resti Yulistia Muslim
Keyword(s):  
Earnings Management ◽  
Sampling Method ◽  
Stock Exchange ◽  
Earnings Quality ◽  
Manufacturing Companies ◽  
Financial Report ◽  
Earnings Response Coefficient ◽  
Discretionary Accrual ◽  
Response Coefficient ◽  
Earnings Response

This research objective is to axamine empirically the influence of earnings management on earnings quality. The study motivated by the controversy of previous study about earnings management and earnings quality. Earnings management was measured by Discretionary Accrual and earnings quality was measured by Earnings Response Coefficient (ERC). The units were 128 (16x8) Quartal financial report in manufacturing companies listed in the Jakarta Stock Exchange, started from the year 2005 up to 2006. The data was collected using purposive sampling method. Statistical method used to test the hypotheses was multiple regressions. The result of the research showed that: the influence of earnings management on earnings quality was negative, sig 0.049. It means that the lower earnings management will be followed by higher earnings quality. This study supported the result of Fetham and Pae (2000), Nelson et al. (2000), Scott (2000), Lobo and Zhou (2001), also Teixeira (2002), Pudjiastuti (2006). 

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