scholarly journals Proteção Anti-takeover e Gerenciamento de Resultados: O Efeito das Poison Pills com Cláusulas Pétreas

2020 ◽  
Vol 23 (3) ◽  
pp. 345
Author(s):  
Yuri Gomes Paiva Azevedo ◽  
Adilson De Lima Tavares ◽  
Anderson Luíz Rezende Mól ◽  
Raimundo Marciano de Freitas Neto
Keyword(s):  
Earnings Management ◽  
Information Quality ◽  
Econometric Model ◽  
Discretionary Accruals ◽  
Securities And Exchange Commission ◽  
Modified Model ◽  
Management Level ◽  
Managerial Entrenchment ◽  
Poison Pills ◽  
The Relationship

Objective:This study aims to investigate whether eternity poison pills influence the earnings management level of Brazilian public companies.Method: We collect data from the bylaws obtained on the website of the Brazilian Securities and Exchange Commission, aiming to identify the use of poison pills and “eternity” clauses by 235 non-financial companies. The information needed to estimate discretionary accruals using the Jones Modified model, and the control variables included in the econometric model, were obtained through the Bloomberg® database. For the data analysis, we use quantile regression, considering the outliers present in the sample.Originality/Relevance: This study fills a gap in the literature regarding the effect of eternity poison pills on discretionary accruals, given that this relationship has not been explored in the Brazilian context. Thus, it is relevant for investors and regulators because it provides evidence on the effects of implementing this anti-takeover mechanism.Results: The main results provide novel evidence on the relationship between poison pills and earnings management in the Brazilian context, demonstrating that this anti-takeover device, when associated with an “eternity” bylaw clause, is positively related to discretionary accruals.Theoretical contributions: It contributes theoretically by showing that the managerial entrenchment caused by the adoption of poison pills with “eternity” clauses may reduce the accounting information quality, shedding light for investors and regulators about this effect of implementing this anti-takeover mechanism.    

Relationship between earnings management, CEO compensation, and stock return on Tehran Stock Exchange

2019 ◽  
Vol 23 (1) ◽  
pp. 1-22
Author(s):  
Mahdi Moardi ◽  
Mahdi Salehi ◽  
Simin Poursasan ◽  
Homa Molavi
Keyword(s):  
Earnings Management ◽  
Cash Flow ◽  
Significant Relationship ◽  
Stock Return ◽  
Stock Exchange ◽  
Discretionary Accruals ◽  
Content Type ◽  
Future Cash Flow ◽  
Accruals Quality ◽  
The Relationship

Purpose The purpose of this paper is to investigate the relationship between earnings management and chief executive officers’ (CEOs) compensation. Owing to the fact that earnings management does not have only opportunistic effects, but signaling effects, this study focuses on accruals quality to examine earnings management incentives. Thus, accruals quality is described against future cash flow. The empirical evidences suggest that a positive relationship between discretionary accruals and future cash flow provides predictive elements for earnings management, whereas a negative relationship between discretionary accruals and future cash implies to opportunistic elements for earnings management. Should there is no significant relationship between discretionary accruals and future cash flow, there will be no earnings management, and such a result suggests that incentives and managers’ performance in these firms differ. Design/methodology/approach The statistical population of this research consists of all listed companies on the Tehran Stock Exchange during 2009–2016. Panel data method is applied in order to estimate the research model. Findings Findings of the study show that there is no significant relationship between discretionary accruals and future cash flow in pharmaceutical and food industries, thus they have neither predictive nor opportunist earnings management, while the results evidence a negative significant relationship between discretionary accruals and future cash flow in machineries, automobile, mineral and chemical industries. Furthermore, it can be alleged that there is no significant difference between CEOs’ compensation in firms with opportunistic earnings management (OEM) and other types of earnings management. It shows that firms do not have appropriate plans for CEOs’ compensation. Moreover, the relationship between earnings management and stock return has been investigated in this study. We document that stock return is influenced by accruals quality and its components. In other words, stock return significantly differs in firms with OEM and firms without any kind of earnings management. Research limitations/implications The authors’ findings provide contributions; for managers, it is noticeable that stock markets have sufficient comprehension about financial statements and the undertaken procedures on them, resulting in a higher return base on fair information. For investors and regulators, using the findings, may have deeper understanding to distinguish between industries that are recognized as opportunistic and non-opportunistic, which, in turn, results in better decision and regulation. Originality/value Previous studies have been mostly investigated OEM, while the current study examines both signaling and opportunistic aspects of earnings management.

Corporate social responsibility disclosures and earnings quality

2015 ◽  
Vol 30 (3) ◽  
pp. 277-298 ◽  
Author(s):  
Mohammad Badrul Muttakin ◽  
Arifur Khan ◽  
Mohammad I Azim
Keyword(s):  
Earnings Management ◽  
Earnings Quality ◽  
Discretionary Accruals ◽  
Financial Reports ◽  
Content Type ◽  
Opportunistic Behaviour ◽  
Context Specific ◽  
Corporate Social ◽  
The Relationship ◽  
Responsible Manner

Purpose – This paper aims to explore the relationship between corporate social responsibility (CSR) disclosures and earnings quality proxied by earnings accruals. Specifically, we examine whether CSR disclosures are context-specific, that is, whether companies dominated by powerful stakeholders are obliged to behave in a responsible manner to constrain earnings management, thereby reporting higher-quality earnings to investors. Design/methodology/approach – This paper explores the relationship between CSR disclosures and earnings quality proxied by earnings accruals. Specifically, we examine whether CSR disclosures are context-specific, that is, whether companies dominated by powerful stakeholders are obliged to behave in a responsible manner to constrain earnings management, thereby reporting higher-quality earnings to investors. Findings – Results show that managers in an emerging economy manage earnings when they provide more CSR disclosures. Such earnings management is achieved through income increasing discretionary accruals. Furthermore, companies from export-oriented industries dominated by powerful stakeholders (international buyers) disclosing more CSR activities, provide transparent financial reports through constraining earnings management. Originality/value – The findings of this study are significant for both investors and policymakers. Investors should not take for granted that firms engage in CSR activities, behave ethically and provide transparent financial reports. As we document that firms might manipulate earnings through discretionary accruals and provide less transparent financial reports to shareholders, the credibility of firms’ CSR policies should be assessed with caution. Policies directing at promoting socially responsible practices instead of motivating the desired behaviour, may provide managers with additional incentives to utilise CSR for opportunistic behaviour. Thus, policymakers need to be cautious about this opportunistic behaviour and enhance monitoring to enforce social compliance. Possibly, some guidelines can be introduced to confirm that CSR disclosures are based on actual practice and not just a “green wash” statement to deceive stakeholders.

Firm borrowing capacity, government ownership and real earnings management

2019 ◽  
Vol 33 (2/3) ◽  
pp. 339-362
Author(s):  
Mouna Ben Rejeb Attia
Keyword(s):  
Public Sector ◽  
Earnings Management ◽  
Information Quality ◽  
Simultaneous Equation ◽  
Real Earnings Management ◽  
Government Ownership ◽  
Content Type ◽  
Financing Decisions ◽  
Research Stream ◽  
The Relationship

Purpose The purpose of this paper is to examine borrowing capacity (BC) of government-owned firms and whether real earnings management (REM) activities moderate the sensitivity of firm BC to government ownership. Design/methodology/approach A simultaneous equation analysis is applied to study 210 Tunisian non-financial firms over the 2001–2014 period. Findings The empirical results provide substantial evidence indicating that government-owned firms have higher BC and significant REM than other firms; the relationship between government ownership and firm BC is partially moderated by REM activities. Practical implications The findings imply that the implicit credit guarantee of government is not necessarily the unique determinant of firm BC and highlight the role of lenders in monitoring discretionary real transactions in government-owned and protected firms. These implications should be taken in to account by public sector policy makers. In particular, the findings predict that the current government accounting reform in Tunisia on the basis of IPSAS will, probably, improve information quality, but it is still insufficient to control real activities in public institutions. Originality/value This study extends a growing research stream on the relationship between BC and government ownership by focusing on the moderating effect of REM on this relationship and by considering the endogeneity issue. The findings provide evidence that government-owned firms use REM practices to improve their BC. Examining these practices in developing countries provides an opportunity to evaluate the efficiency of their public sector reforms and their effect on a firm’s performance and financing decisions.

scholarly journals Working Capital and Earnings Management among Manufacturing Firms: A Review of Literature

2020 ◽  
pp. 71-97
Author(s):  
Josiah Aduda ◽  
Morgan Ongoro
Keyword(s):  
Earnings Management ◽  
Negative Relationship ◽  
Future Research ◽  
Capital Management ◽  
Working Capital ◽  
Working Capital Management ◽  
Management Level ◽  
Accounting Accruals ◽  
The Relationship

This study critically reviewed literature on the relationship between working capital management and earnings management. The specific objectives of the study included determination of documented evidence on; the relationship between working capital management and earnings management, the existence of target working capital management level and target earnings management level and knowledge gaps between the two study variables. Findings on the first objective were conflicting with some researchers establishing a positive relationship, others a negative relationship whereas others were non-conclusive. Findings on the second objective were also conflicting. The divergence in findings were attributed to differences in conceptual, methodological and contextual setups with inconsistencies in operationalization of the study variables playing a pivotal role. The study revealed a biased inclination towards usage of accounting accruals as proxies for earnings management with no consideration for non-accounting accruals like real earnings managements. The study also identified lack of related studies in frontier economies as a potential research gap paving way for future related studies with expanded scope. The study further recommended future research on determination of an optimal working capital level that minimizes real earnings management.

scholarly journals The Impact of Political Connection on Earnings Management in China’s Private Enterprises

2020 ◽  
Vol 13 (6) ◽  
pp. 128
Author(s):  
Zhiyuan Liao ◽  
Weijian Zhang ◽  
Xiaohui Tao
Keyword(s):  
Earnings Management ◽  
Private Enterprises ◽  
Political Connection ◽  
Private Companies ◽  
Management Level ◽  
Management Behaviour ◽  
Quality Of Accounting Information ◽  
The Impact ◽  
The Relationship

Earnings management behaviour lowers the quality of accounting information of private enterprises to a certain extent. Hence, it is necessary to study the relationship between political connection and earnings management of private enterprises. Through the investigation and statistics of the private companies in China’s Small and Medium-sized Enterprise Board Market from 2013 to 2017, this paper performs empirical analysis to verify the relationship between political connection and earnings management. It shows that political connection can weaken accrual-based earnings management level, which helps private firms obtain more preferential policies and financing help. Based on the above conclusions, this paper puts forward the corresponding policy recommendations, which provide reference for the governance of private enterprises and the capital market.

scholarly journals Auditor report and earnings management: Evidence from FTSE 350 companies in the UK

2016 ◽  
Vol 6 (4) ◽  
pp. 334-344 ◽  
Author(s):  
Mohammad Alhadab
Keyword(s):  
Earnings Management ◽  
Discretionary Accruals ◽  
Real Earnings Management ◽  
Audit Report ◽  
Audit Firms ◽  
The Uk ◽  
Different Characteristics ◽  
The Relationship

This paper examines the relationship between audit report and real-based and accrual-based earnings management based on a UK sample. Prior research has mostly focused on US data and examined the relationship between auditor report (qualified vs. non-qualified) and earnings management (proxied by discretionary accruals), and found evidence that qualified audit report is positively associated with the level of discretionary accruals. Despite the importance of the role of audit firms to constrain the use of earnings management, there is no research to date has examined the relationship between auditor reports and real earnings management activities based on UK sample. This paper therefore fills this gap in the literature by providing the first evidence for UK FTSE 350 companies that auditor report is positively associated with real and accrual earnings management. The paper also provide evidence that firms received qualified audit report share different characteristics as compared to firms received un-qualified audit report.

scholarly journals The Impact Of Audit Committee Multiple-Directorships On Earnings Management: Evidence From France

2013 ◽  
Vol 29 (5) ◽  
pp. 1333 ◽  
Author(s):  
Samir Baccouche ◽  
Manel Hadriche ◽  
Abdelwehed Omri
Keyword(s):  
Earnings Management ◽  
Audit Committee ◽  
Discretionary Accruals ◽  
Listed Firms ◽  
Multiple Directorships ◽  
The Impact ◽  
The Relationship

The aim of this paper is to examine the relationship between Audit Committee Multiple-Directorships and earnings management. Precisely, we empirically investigate the effect of the multiple directorships held by audit committee directors on the level of earnings management of listed French companies. Our investigation has been achieved on a sample of 88 non financial French listed firms that belong to the SBF 120 index, for the financial year 2008. The results suggest that the accumulation of several outside directorships by audit committee members may lead to a higher degree of earnings management, as measured by the magnitude of discretionary accruals. Therefore, our findings show that audit committee cant provide effective monitoring of earnings management when its members held many additional outside directorships.

Financial Distress, the Severity of Financial Distress and Direction of Earnings Management: Evidences from Indian Economy

2021 ◽  
pp. 231971452110393
Author(s):  
Debdas Rakshit ◽  
Chanchal Chatterjee ◽  
Ananya Paul
Keyword(s):  
Regression Analysis ◽  
Earnings Management ◽  
Financial Distress ◽  
Discretionary Accruals ◽  
Z Score ◽  
Financial Condition ◽  
Low Degree ◽  
Distressed Firms ◽  
Distance To Default ◽  
The Relationship

This paper investigates the relationship between earnings management and financial distress and considers whether this relationship varies based on the severity of financial distress and signs of discretionary accruals (a proxy for earnings management). For this purpose, multiple regression analysis has been employed on a sample of 192 financially distressed Indian firms during the period 2011–2018, counting to 1,272 firm-year observations. Discretionary accruals are estimated by the Modified Jones model and Raman and Shahrur (2008) model, while Altman’s Z-score and distance-to-default model are used to detect the degree of financial distress. The findings disclose that the low distressed firms are indulged in higher earnings management than high distressed firms. Also, the low distressed firms are engaged more in income-decreasing earnings management. However, the results are not consistent across both earnings management and distress measures. The findings have significant implications for investors and creditors. They need to be aware of this fact while evaluating creditworthiness of a firm since firms with even a low degree of financial distress can indulge in earnings management to camouflage their true financial condition.

CEO characteristics and earnings management: empirical evidence from France

2020 ◽  
Vol 18 (1) ◽  
pp. 77-110 ◽  
Author(s):  
Dhouha Bouaziz ◽  
Bassem Salhi ◽  
Anis Jarboui
Keyword(s):  
Earnings Management ◽  
Significant Relationship ◽  
Management Practices ◽  
Discretionary Accruals ◽  
Content Type ◽  
Financial Communication ◽  
The Impact ◽  
The Relationship ◽  
Ceo Characteristics

Purpose The purpose of this paper is to investigate the impact of chief executive officer (CEO) characteristics on the earnings management examined by the discretionary accruals. Design/methodology/approach The sample includes 151 French firms listed on the CAC ALL shares index from 2006 to 2015. The paper uses the feasible generalized least square regression technique to test the relationship between CEO characteristics and earnings management. Findings Using discretionary accruals as a proxy for earnings management, the results obtained from the three models (Jones modified 1995; Kothari et al., 2005; Raman and Shahrur, 2008) indicated that there is a positive and significant relationship between CEO duality, CEO nationality and the quality of financial communication. However, no significant relationship was found between CEO board member, CEO turnover and earnings management. Originality/value A literature review finds that fewer studies have investigated the relationship between earnings management practices and personal CEO characteristics in the French context. Furthermore, no study yet has examined the influence of CEO nationality and CEO age on earnings management practices. This study provides empirical data about the impact of CEO’s characteristics on earnings management and how these different characteristics can facilitate the transition to manipulate and influence the quality of financial communication.

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