Abstract:Purpose -This paper aims to evaluate whether the earnings management diagnostic using changes in asset turnover and profit margin as proposed by Jansen et al., ( 2012) is informative in identifying earnings management Methodology -Two tests were employed: firstly, the association between the diagnostic and discretionary accruals using Kothari et al., (2005) model, was tested by using Pearson correlation and contingency tables. Secondly, by using future profitability re versals as an indicator of earnings manag… Show more
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