Earnings management has received considerable attention as numerous papers were investigated different hypotheses. However, there is still no consensus on how efficiently detect and measure earnings managements. Nevertheless, most authors use methodology based on accruals, sophisticated models that attempt to separate total accruals into discretionary and nondiscretionary components. We may find wide range of use of alternative models to measure earnings management. Nevertheless, the researchers typically used five the most popular models: the Jones (1991) model, the modified Jones model (Dechow, Sloan, and Sweeney, 1995), Teoh, Welch and Wong (1998) model, Kasznik (1999) model and Kothari et al. (2005) model. However, it is confirmed that the environment where the company is operating influences on the earnings management.
Therefore, we focus our study on the growing market of the developing European countries. In particular, our analysis comprises four different and independent samples from emerging Eastern European countries: Poland, Hungary, Slovakia and the Czech Republic, since earnings management in Eastern European countries is still barely explored. Consequently, our objective is to evaluate the ability of the existing models on earnings management for the environment of countries from the East of Europe.
Our results confirm that the Jones (1991), Shivakumar (1996), Kasznik (1999) and Yoon and Miller model (2002) offers the most reliable results for detecting earnings management in emerging Eastern European post-communism economic environment. Additionally, based on broad analyses the results indicate that there is no superiority of the cross-sectional models vis-à-vis their time-series counterparts. Both methodologies are consistent in detecting earnings management for Eastern European companies. Therefore, we verified the importance of the previous evaluation of the ability of each model for detecting earnings management before its application. It is because each economic environment has different peculiarities and circumstances, as observed in case of our developing European countries.
Topical application of coal tar solution (USP) to neonatal rats resulted in the induction of skin and liver aryl hydrocarbon hydroxylase (AHH) activities. Furthermore indirect exposure of the animals to coal tar vapors resulted in induction of the enzyme in skin and liver. Cutaneous application of coal tar to pregnant rats resulted in induction of skin and liver AHH activity in both mothers and prenatal rats. Among several defined constituents of coal tar tested benzo(a)pyrene (BP), anthracene and acridine were found to have measurable induction effects on neonatal rat skin and liver AHH. These studies indicate that therapeutic coal tar solution as well as selected defined chemical constituents of coal tar are capable of altering the activity of AHH in skin and liver.
Earnings management literature attempts to understand why managers manipulate earnings. Our paper presents a review of growing body of literature on motivations for the earnings manipulation. In consequence, our objective is to provide an ample classification of the reasons. A selection of leading papers was reviewed systematically from 1985 to early 2019 resulting in 383 articles. The results of the paper are important for both theoretical and empirical researches on the earnings management. For one side, we offer a theoretical discussion on the incentives and factors; on the other side, the paper aims to highlight recent progresses in the field. Screening, classifying and systematic review of earnings management literature do not only generate a structured overview of the work performed in this area during more than thirty years, but it also provides insights for further research. Our findings confirm that earnings management topic remains a fertile ground for academic research. Second, although there are many possible motives for managing earnings, the spotlight has been mainly on those incentives that are related to the stock market. Third, in terms of the factors and characteristics of the environment, the impact of institutional factors (investor protection, ownership concentration, legal enforcement) is especially accentuated by the authors. Finally, our research confirms that there are still many other opportunities to research. Therefore, in the last section we identify potential line of investigations.
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