Untitled

Beneish, Messod Daniel

doi:10.1023/a:1009692703952

Cited by 83 publications

(13 citation statements)

References 19 publications

Supporting

Mentioning

Contrasting

Order By: Relevance

“…In order to test if the results are sensitive to the measure of earnings management we used, we also estimate discretionary accruals using two variations of the original Jones Model: i) the modified Jones Model (De Fuentes & Porcuna, 2019;Dechow et al, 1995;Paiva et al, 2019) and ii) the short-term Jones Model (Beneish, 1998;Teoh et al, 1998). The results for Model (1) and Model (2) are reported in Tables 7 and 8, respectively, and are qualitatively similar to those reported in the main analysis.…”

Section: Alternative Measures Of Earnings Managementmentioning

confidence: 99%

Audit fees and earnings management: differences based on the type of audit

Cabedo

Huguet

2020

Economic Research-Ekonomska Istraživanja

View full text Add to dashboard Cite

In spite of the extensive research about the impact of audit fees on audit quality, there is no research examining if the association between voluntary audits and audit pricing affects audit quality. Therefore, the aim of this paper is to empirically examine whether the effect of audit fees on audit quality, measured by the level of earnings management, is affected by the type of audit (voluntary vs mandatory), as well as whether the effect of audit fees on audit quality is different depending on the type of audit. Using a sample of Spanish SMEs composed of both voluntarily and mandatorily audited companies, we find that voluntary audits have higher quality when audit fees are lower, but the differences in audit quality between voluntary and mandatory audits reverse as audit fees increase, and mandatory audits are more effective at deterring earnings management when audit fees are high. Additional analyses show that voluntary audits do not directly affect earnings management; instead, voluntary audits are associated with abnormal fees, which in turn negatively affect earnings management. The results also show that audit fees are only negatively associated with earnings management when accruals are income-increasing, which is related to auditor conservatism.

show abstract

Section: Alternative Measures Of Earnings Managementmentioning

confidence: 99%

Audit fees and earnings management: differences based on the type of audit

Cabedo

Huguet

2020

Economic Research-Ekonomska Istraživanja

View full text Add to dashboard Cite

show abstract

“…Despite the statistical and economic significance of the above studies, many academics contest such conclusions. Beneish [65] doubts the possibility of systematically inflating earnings without arousing the suspicions of regulators or shareholders. Ball and Shivakumar [66,67] argue that IPO firms should be induced to report more conservatively, because of the higher reporting standards demanded for public companies, better monitoring by boards and analysts, or penalties for misreporting.…”

Section: Earnings Quality Around Going Public: the Existing Evidencementioning

confidence: 99%

Towards Economic Corporate Sustainability in Reporting: What Does Earnings Management around Equity Offerings Mean for Long-Term Performance?

Lizińska

Czapiewski

2018

Sustainability

View full text Add to dashboard Cite

Companies are very important contributors to the long-term sustainable wealth of economies and society. Public companies are likely to be especially important for economic, environmental, and social development. That is why we focus on initial public offerings (IPO). Responsible external reporting relates to the long-term value of companies and influences perceptions of value by stakeholders. This study contributes to the literature not only because it concentrates on earning quality in terms of going public, but it also combines it with another market puzzle, namely, long-term value. Previous conclusions for other markets should not simply be generalized for Poland, as the country has been an emerging market with many public firms controlled by insiders, with a limited role for the equity market and quite considerable bank financing. Using a unique dataset, we find positive and significant discretionary accruals in the IPO year, which may be perceived as a sign of poor earning quality. We also show that these accruals are negatively correlated with subsequent long-term market value for IPOs made before the financial crisis. The general conclusions are robust with respect to the latest innovations in proxies for earnings management, and also to a variety of alternative specifications.

show abstract

“…7 2.2.2 | Probability of manipulation Although overvalued firms have weak fundamental performance, Jensen (2005) suggests that these firms overstate their performance through earnings manipulation. We rely on Beneish (1999) to measure the probability of earnings overstatement. The Beneish (1999) model is appropriate for studying the relation between fraudulent earnings overstatement and equity overvaluation for two reasons.…”

Section: Fundamental Performancementioning

confidence: 99%

“…Our model is a scoring system that combines firm characteristics into an overvaluation score (OVR-Score) ranging from 0-5. Firms receive one point for having a high likelihood of earnings overstatement (based on the Beneish's (1999) M-Score measure), high sales growth, low operating cash flows to total assets, an acquisition in the last 5 years, and unusual amounts of equity issuance in the past 2 years. 3 Thus, firms with glamour characteristics, poor current operating cash flow performance, a high likelihood of earnings overstatement, a history of merger activity, and recent but excessive issuances of stock fit our profile of overvalued equity.…”

mentioning

confidence: 99%

Identifying overvalued equity

Beneish

Nichols

2023

Rev Financ Econ

View full text Add to dashboard Cite

We develop a profile of overvalued equity, and show that firms meeting this profile experience abnormal stock returns net of transaction costs of −22% to −25% over the 12 months following portfolio formation. We show our model is distinct from predictors proposed in prior work, and our results robust to alternative measurements of expected returns. We also show that overvaluation is not confined to small firms and that institutions do not trade as if they identify overvalued equity. The profitable predictability we document suggests a pricing anomaly relating to the 2.5% of the firms in the population that our model identifies as substantially overvalued. Although we believe markets are generally efficient within the bounds of transaction costs, our evidence suggests that violations of minimally rational use of publicly available information do occur. To the extent that anomalies disappear or attenuate once documented in the literature (Doukas et al., 2002 [European Financial Management, 2002, 8, 229]; Schwert, 2003 [Handbook of the Economics of Finance, 2003, 1, 939]), our results are of interest to financial economists and investors.

show abstract

Untitled

Cited by 83 publications

References 19 publications

Audit fees and earnings management: differences based on the type of audit

Audit fees and earnings management: differences based on the type of audit

Towards Economic Corporate Sustainability in Reporting: What Does Earnings Management around Equity Offerings Mean for Long-Term Performance?

Identifying overvalued equity

Contact Info

Product

Resources

About