Online citations, reference lists, and bibliographies.

Definitions, Activities, And Measurement Of Earnings Management

Malek El Diri
Published 2018 · Business

Cite This
Download PDF
Analyze on Scholarcy
Share
A comprehensive definition of earnings management should take into consideration its characteristics, conditions, activities, and targets. Such a definition allows distinguishing earnings management from other activities like fraud, earnings quality, impression management, and expectation management. Managers may use different methods to manage earnings including accrual earnings management, real earnings management, earnings smoothing, income shifting, and other advanced techniques. They trade-off between these methods based on their costs and benefits to their firms and own welfare. Although different models have been introduced to measure the previous activities, most of them focused on accrual earnings management. These models suffer from shortcomings that can be mitigated by developing new models, paying more attention to measuring activities other than accrual earnings management, analysing more than one activity at a time, using more than one model to measure the same activity, and adopting qualitative methodology.
This paper references
10.2139/SSRN.447940
Gatekeeper Failure and Reform: The Challenge of Fashioning Relevant Reforms
J. Coffee (2003)
10.2139/SSRN.1003101
Accounting Accruals and Tests of Earnings Management
Jianming Ye (2007)
10.2139/SSRN.231489
Why Do Firms Smooth Earnings
A. Goel (2000)
10.1080/00014788.1999.9729590
CROSS-SECTIONAL ESTIMATION OF ABNORMAL ACCRUALS USING QUARTERLY AND ANNUAL DATA: Effectiveness in Detecting Event-Specific Earnings Management
Debra C. Jeter (1999)
10.2307/2491176
Evidence of Earnings Management from the Provision for Bad Debts
M. McNichols (1988)
Discretionary Disclosure Strategies in Corporate Narratives: Incremental Information or Impression Management?
D. Merkl-Davies (2008)
The timing of asset sales and earnings manipulation
E. Bartov (1993)
10.1016/S0165-4101(97)00017-7
Earnings Management to Avoid Earnings Decreases and Losses
D. Burgstahler (1997)
10.1111/J.1911-3846.2010.01059.X
Corporate Governance and Earnings Management by Classification Shifting
I. Haw (2011)
10.2139/ssrn.477941
Earnings Management through Real Activities Manipulation
Sugata Roychowdhury (2003)
Financial Analysis: A User Approach
G. Giroux (2002)
10.2308/ACCR.2009.84.3.869
Board Committees, CEO Compensation, and Earnings Management
C. Laux (2009)
10.2308/ACCR-51153
Managing for the Moment: The Role of Earnings Management via Real Activities versus Accruals in SEO Valuation
S. Kothari (2016)
10.1016/S0278-4254(00)00018-1
Research design issues in earnings management studies
M. McNichols (2000)
10.1016/S0165-4101(96)00431-4
What motivates managers' choice of discretionary accruals?
V. Bernard (1996)
10.2139/ssrn.235798
Capital Markets Research in Accounting
S. Kothari (2000)
10.2139/SSRN.235009
Corporate Disclosure Policy and the Informativeness of Stock Prices
D. Gelb (2000)
10.2139/ssrn.304195
Earnings Management and Corporate Governance: The Roles of the Board and the Audit Committee
Biao Xie (2001)
10.2307/2491427
A Market-Based Evaluation of Discretionary-Accrual Models
W. Guay (1996)
10.2308/ACCR.2004.79.2.305
R&D Expenditures and CEO Compensation
Shijun Cheng (2004)
10.2308/ACCR-50318
Managerial Ability and Earnings Quality
Peter Demerjian (2013)
10.1016/S0020-7063(99)00004-7
Do firms use industry-wide targets when managing earnings? Finnish evidence
J. Kallunki (1999)
10.1016/J.JACCECO.2004.11.002
PERFORMANCE MATCHED DISCRETIONARY ACCRUAL MEASURES
S. Kothari (2001)
10.1162/003355398555559
Fiscal Year Ends and Nonlinear Incentive Contracts: The Effect on Business Seasonality
Paul Oyer (1998)
The economic implications of corporate financial reporting
John R. Graham (2005)
10.2139/SSRN.816025
The Relation between Earnings Management Using Real Activities Manipulation and Future Performance: Evidence from Meeting Earnings Benchmarks
Katherine Gunny (2009)
10.2139/SSRN.524062
Stock Repurchases as an Earnings Management Device
P. Hribar (2006)
10.2308/ACCR.2002.77.S-1.35
The Quality of Accruals and Earnings: The Role of Accrual Estimation Errors
Patricia M. Dechow (2001)
10.1111/1475-679x.00041
Errors in Estimating Accruals: Implications for Empirical Research
D. Collins (1999)
10.1016/J.JACCECO.2005.12.001
Corporate-sponsored foundations and earnings management
C. Petrovits (2006)
Financial Accounting Theory
W. Scott (1983)
10.1111/J.1911-3846.2010.01029.X
The Relation Between Earnings Management Using Real Activities Manipulation and Future Performance: Evidence from Meeting Earnings Benchmarks*: Real Activities Manipulation and Future Performance
Katherine Gunny (2010)
10.1002/9781119204763.ch4
DETECTING EARNINGS MANAGEMENT
Patricia M. Dechow (1994)
10.1007/S11142-013-9250-Y
How does earnings management influence investor’s perceptions of firm value? Survey evidence from financial analysts
A. Jong (2013)
10.1016/0167-7187(91)90058-S
Executive incentives and the horizon problem: An empirical investigation
Patricia M. Dechow (1991)
10.2139/ssrn.294688
Evidence from Auditors about Managers' and Auditors' Earnings-Management Decisions
M. Nelson (2001)
The effect of restructuring charges on executives' cash compensation
Patricia M. Dechow (1993)
10.2307/2491177
Discussion of Evidence of Earnings Management from the Provision for Bad Debts
L. DeAngelo (1988)
10.1080/00076791.2012.712964
Creating better boards through codification: Possibilities and limitations in UK corporate governance, 1992–2010
D. Nordberg (2013)
10.2139/SSRN.192748
Bias and Measurement Error in Discretionary Accrual Models
G. A. Hansen (1999)
10.2308/ACCR.2006.81.3.501
Earnings Management Using Classification Shifting: an Examination of Core Earnings and Special Items
Sarah McVay (2006)
10.2308/ACCR.2002.77.S-1.61
Discussion of the Quality of Accruals and Earnings: The Role of Accrual Estimation Errors
M. McNichols (2002)
Earnings management : emerging insights in theory, practice, and research
J. Ronen (2008)
10.5860/choice.39-5905
The Financial Numbers Game: Detecting Creative Accounting Practices
Charles W. Mulford (2002)
10.2308/ACCR.2005.80.4.1101
Economic Effects of Tightening Accounting Standards to Restrict Earnings Management
R. Ewert (2005)
10.2139/SSRN.1270826
Income Smoothing and Idiosyncratic Volatility
G. Markarian (2012)
10.2139/ssrn.94009
Performance Pay and Top Management Incentives
Kevin J. Murphy (1990)
10.2307/2491353
Performance Measure Garbling Under Renegotiation in Multi-Period Agencies
Hans Frimor (1999)
10.1111/1468-5957.00277
Systematic Measurement Error in the Estimation of Discretionary Accruals: An Evaluation of Alternative Modelling Procedures
S. Young (1999)
10.1111/j.1475-679x.2005.00169.x
Discussion of Earnings Management Through Transaction Structuring: Contingent Convertible Debt and Diluted Earnings Per Share
P. O'brien (2005)
10.2139/ssrn.154008
Do Firms Mislead Investors by Overstating Earnings Before Seasoned Equity Offerings
L. Shivakumar (1999)
10.1023/A:1024481916719
Why Are Earnings Kinky? An Examination of the Earnings Management Explanation
Patricia M. Dechow (2003)
10.2308/ACCR-10128
An Analysis of Managerial Use and Market Consequences of Earnings Management and Expectation Management
S. Das (2011)
10.1177/0148558X0902400401
The “Numbers Game” in the Pre- and Post-Sarbanes-Oxley Eras
E. Bartov (2009)
10.2308/ACCR.2001.76.1.27
Accruals and the Prediction of Future Cash Flows
M. Barth (1999)
10.2308/ACCR-10092
Overvaluation and the Choice of Alternative Earnings Management Mechanisms
Brad A. Badertscher (2011)
10.2139/SSRN.1053641
The Optimal Focus of Transfer Prices: Pre-Tax Profitability versus Tax Minimization
Jan Martini (2015)
10.1007/S11142-014-9310-Y
Cross-jurisdictional income shifting and tax enforcement: evidence from public versus private multinationals
Christof Beuselinck (2014)
10.2307/2491047
Earnings Management During Import Relief Investigations
J. Jones (1991)
UNUSUAL PATTERNS IN REPORTED EARNINGS
J. Thomas (1988)
10.2139/ssrn.218959
Earnings Management: Reconciling the Views of Accounting Academics, Practitioners, and Regulators
Patricia M. Dechow (2000)
10.1016/0167-7187(91)90058-S
Executive Compensation and Horizon Incentives: an Empirical Investigation
Sheng Huang (2012)
10.2308/ACCR-10196
Evidence on the Trade-Off between Real Activities Manipulation and Accrual-Based Earnings Management
Amy Y. Zang (2011)
10.2308/ACCR-10037
Modeling Discretionary Accrual Reversal and the Balance Sheet as an Earnings Management Constraint
William R. Baber (2011)
10.1177/0148558X9701200103
Earnings Management of Chemical Firms in Response to Political Costs from Environmental Legislation
Steven F. Cahan (1997)
10.1086/261976
A Theory of Income and Dividend Smoothing Based on Incumbency Rents
D. Fudenberg (1995)
10.1016/0165-1765(85)90121-1
Repeated principal-agent relationships with lending and borrowing
F. Allen (1985)
10.1016/J.JACCECO.2010.01.002
Accrual-Based and Real Earnings Management Activities Around Seasoned Equity Offerings
D. Cohen (2008)
10.1111/J.1911-3846.1998.TB00560.X
Performance Measure Manipulation
Joel S. Demski (1998)
10.1111/J.1467-8683.2008.00672.X
Board Independence and Real Earnings Management: The Case of R&D Expenditure
Beatriz García Osma (2008)
10.1016/0165-4101(85)90029-1
The effects of bonus schemes on accounting decisions
Paul Healy (2011)
10.1016/J.JACCECO.2010.09.001
Understanding Earnings Quality: A Review of the Proxies, Their Determinants and Their Consequences
Patricia M. Dechow (2010)
10.2307/2491070
ON THE USEFULNESS OF EARNINGS AND EARNINGS RESEARCH: LESSONS AND DIRECTIONS FROM TWO DECADES OF EMPIRICAL RESEARCH
B. Lev (1989)
10.2139/ssrn.276997
Earnings Management: New Evidence Based On Deferred Tax Expense
J. D. Phillips (2001)
10.2139/SSRN.465201
An Equilibrium Model of Incentive Contracts in the Presence Of Information Manipulation
E. Goldman (2005)
10.2308/ACCR.2008.83.3.757
Real and Accrual-Based Earnings Management in the Pre- and Post-Sarbanes Oxley Periods
D. Cohen (2004)
10.1016/S0278-4254(00)00016-8
Identifying unexpected accruals: a comparison of current approaches
J. K. Thomas (2000)
10.1080/00014788.2013.785823
How far can we trust earnings numbers? What research tells us about earnings management
M. Walker (2013)
10.1111/1475-679X.00017
Reporting Discretion and Private Information Communication Through Earnings
M. R. Sankar (1997)
The Effect of Antitrust Investigations on Discretionary Accruals: A Refined Test of the Political-Cost Hypothesis
Steven F. Cahan (2016)
10.2308/ACCR.2009.84.6.1833
Special Purpose Vehicles: Empirical Evidence on Determinants and Earnings Management
M. Feng (2009)
10.1016/S0278-4254(00)00005-3
The Effect of Relative Performance Evaluation on Earnings Management: A Game-theoretic Approach
M. Bagnoli (2000)
10.1108/09513570110399890
The effect of thematic structure on the variability of annual report readability
M. Clatworthy (2001)
10.1080/00014788.2009.9663347
Earnings management or forecast guidance to meet analyst expectations?
Vasiliki Athanasakou (2008)
Detecting Earnings Management
G. Giroux (2003)
10.2307/2491492
Issues In Testing Earnings Management And An Instrumental Variable Approach
Sok-Hyon Kang (1995)
10.1023/A:1006400707757
Corporate Communication and Impression Management – New Perspectives Why Companies Engage in Corporate Social Reporting
Reginald Hooghiemstra (2000)
Smoothing income numbers : objectives, means, and implications
J. Ronen (1981)
10.2308/ACCH-10025
Is Enhanced Audit Quality Associated with Greater Real Earnings Management?
W. Chi (2010)
10.2139/ssrn.1361905
Market Competition and Earnings Management
Dalia Marciukaityte (2009)
10.1177/0148558X9801300309
Valuation of Permanent, Transitory, and Price-Irrelevant Components of Reported Earnings
R. S. Ramakrishnan (1998)
10.1016/J.JACCPUBPOL.2013.02.007
Predictive versus opportunistic earnings management, executive compensation, and firm performance
Davit Adut (2013)
10.1506/TFVV-UYT1-NNYT-1YFH
Last‐Chance Earnings Management: Using the Tax Expense to Meet Analysts' Forecasts*
D. S. Dhaliwal (2004)



This paper is referenced by
Semantic Scholar Logo Some data provided by SemanticScholar