Allowance for uncollectible accounts as a tool for earnings management

Lee, Hyun-Ah; Choi, Won Wook

doi:10.1108/ijaim-06-2015-0040

Cited by 19 publications

(18 citation statements)

References 24 publications

(42 reference statements)

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“…We also review most recently earnings management studies. Lee and Choi (2016) benchmarks, that is, avoid losses, sustain last year's earnings and meet analysts' forecasts. Alzoubi (2016) investigates Jordanian listed companies during the period from 2006 to 2013 and find that ownership structure is associated with lower earnings management.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

“…We also reviewed most recent earnings management studies. Lee and Choi (2016) report a relationship between earnings management and the allowance for uncollectible accounts among Korean non-financial firms during the period from 2000 to 2012 and the results show that the allowance for uncollectible accounts has been used as a strategic tool to beat important benchmarks, that is, avoid losses, sustain last year’s earnings and meet analysts’ forecasts. Alzoubi (2016) investigates Jordanian listed companies during the period from 2006 to 2013 and find that ownership structure is associated with lower earnings management.…”

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

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An exploratory analysis of earnings management practices in Australia and New Zealand

Sun

Farooque²

2018

IJAIM

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Purpose This study aims to explore corporate earnings management practices in Australia and New Zealand before and after the regulatory changes and corporate governance reforms. The study argues that the effectiveness of regulatory reforms has to be reflected in constraining earnings management in post-reform period as compared to pre-reform period. Design/methodology/approach Using a sample of 3,966 firm-year observations, including all ASX and NZX listed firms for the period 2001-2006, the study examines earnings management practices in both countries in pre- and post-reform periods with appropriate statistical methods. Findings The results indicate some interesting phenomenon: the magnitude of earnings management did not decline after the governance reform as a positive time trend is observed in the entire sample as well as in Australian and New Zealand sub-samples, suggesting that earnings management has been growing over time. Additional test indicates no structural change has occurred before and after the new regulations. The shifting from decreasing earnings management to increasing earnings management can be interpreted as an evidence that earnings become more ‘informative’ in a more transparent disclosure regime to capture short-run benefits from regulator reforms. Research limitations/implications The shifting of earnings management behaviour from decreasing to increasing income can be interpreted as the outcome of more “informative”, rather than “deliberate”, earnings management in a more transparent disclosure regime to capture short-run benefits of regulatory reforms, which is worth further investigation. The findings of the study can lead regulatory authorities taking appropriate measures to promote earnings quality in corporate financial reporting from a long-run decision usefulness context. Any future reforms should be directed to protecting the interest of stakeholders as well as ensuring benefits outweighing costs for them. Practical implications The findings of the study can lead regulatory authorities in taking appropriate measures to promote earnings quality in corporate financial reporting from a long-run decision usefulness context. Originality/value The study adds value to the existing earnings management literature as well as effectiveness of regulations for the benefit of wider stakeholder groups.

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Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

Section: Literature Review and Hypotheses Developmentmentioning

confidence: 99%

An exploratory analysis of earnings management practices in Australia and New Zealand

Sun

Farooque²

2018

IJAIM

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“…Capitalización no selectiva de gastos de investigación y desarrollo, I&D Incluye el reconocimiento de las actividades de investigación y desarrollo como activos intangibles, capitalizando las asignaciones de I&D sin que estas cumplan los requisitos para serlo. En la NIC 38, respecto al tratamiento de los gastos de investigación y desarrollo, la empresa puede elegir entre contabilizarlos como gasto o activarlos, teniendo como resultado que se pueda aumentar o reducir el resultado y los activos en función de lo que convenga (Solá, 2019 En ese sentido, se considera que estos incumplimientos de principios contables, se desvían de la idea primordial de los mismos, al realizarse manipulaciones para mostrar una imagen deseada del negocio, que, a pesar de no ser ilegal, no es ética, al incumplir con el objetivo transcendental de los informes financieros, y utilizarse brechas, principalmente en los principios de valoración de inventarios; valoración de intangibles; provisiones; contingencias; y revalorización de activos; entre otros, en lo cual han coincidido autores como (Saleem Salem Alzoubi, 2016;Bhasin 2016;Inaam y Khamoussi, 2016;Lee y Choi, 2016;Shahid y Ali, 2016;Goel, 2017;Remenarić, Kenfelja, y Mijoč, 2018;Gupta, y Kumar, 2020).…”

Section: Nic 16unclassified

Contabilidad creativa: Perspectivas jurídicas y empresariales a partir de los procesos de información

Falcón¹,

Cejas²,

Martínez³

et al. 2021

RVG

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La contabilidad creativa, es un fenómeno que se produce cuando directivos y contadores presentan la información con resultados no congruentes con la realidad financiera de la empresa. El objetivo esta investigación fue describir la naturaleza y alcance de la contabilidad creativa desde un enfoque jurídico y empresarial, a partir de los procesos de información. Esta es una investigación de tipo descriptiva. El diseño fue no experimental- transversal (Rodríguez, Ramírez, Carmona e Ibáñez, 2021). Desde la perspectiva de las fuentes de información el diseño fue documental (Bernal, Martínez, Parra y Jiménez, 2015). La técnica utilizada fue el análisis de contenido. Los resultados del análisis demuestran que la contabilidad creativa, debe estar orientada a innovar o agilizar los procesos de reporte de la información de manera clara, real y oportuna, generando estrategias para la solución de los problemas en el contexto empresarial. Lo cual permite concluir que, tanto desde una perspectiva jurídica como empresarial, los procesos de información contable deben perfeccionarse, evitando manifestaciones fraudulentas en los mismos.

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“…Alzoubi (2016) studied the role and impact of managements choice over the working of CA in their company. Lee (2016) studied the impact of the usage of writing off of the accounts. Mindak et al (2016) studied the motives behind the usage of CA.…”

Section: Related Studies On Creative Accountingmentioning

confidence: 99%

Creative accounting a tool for financial crime: a review of the techniques and its effects

Gupta

Kumar

2020

JFC

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Purpose The purpose of this paper is to study the concept and procedure of creative accounting as how is it worked around and how it can lead to financial crimes. The procedure which are followed and which are the people who are involved and who are the victims of such crimes. The methods which are used to perform the action and how is it done. What are the findings of different researchers who have studied the same concept and how can it be curbed is the main purpose of the paper. Design/methodology/approach This paper is designed to find out the working of accounting policies and how the loopholes in the same can actually be taken into account, resulting in a certain number games which can be played around it, and to get the desired outcome in the preparation of financial statements. Findings Creative accounting, though legal and acceptable around the world, gives in the way to loopholes provided by the acts and rules governing the preparation of financial statements and eventually leading to financial crimes and hampering the economy as a whole. Research limitations/implications The limitations of this study remain to the fact that it is an empirical study, as a lot of papers and articles were studied before giving it a shape and reaching a conclusion. Practical implications Creative accounting though not illegal but the excess use of the same has given daunting effects on the financial statements and as a result have resulted into financial frauds and looting of peoples money throughout the world. Social implications Hard-earned money of the investors is looted and no action can be taken against as the mechanism and the legal bodies are still struggling to curb the problem, and thus it is very important to learn about creative accounting. Originality/value This study leads to the understanding of the growth of creative accounting and how it has resulted in accounting frauds leading to financial crimes in an economy.

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Allowance for uncollectible accounts as a tool for earnings management

Cited by 19 publications

References 24 publications

An exploratory analysis of earnings management practices in Australia and New Zealand

An exploratory analysis of earnings management practices in Australia and New Zealand

Contabilidad creativa: Perspectivas jurídicas y empresariales a partir de los procesos de información

Creative accounting a tool for financial crime: a review of the techniques and its effects

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