Are Unmanaged Earnings Always Better for Shareholders?

Arya, Anil; Glover, Jonathan; Sunder, Shyam

doi:10.2308/acch.2003.17.s-1.111

Cited by 191 publications

(75 citation statements)

References 9 publications

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“…Some researches support this statement and called it beneficial earnings management (Subramanyam, 1996). The research done these days, like one done by Arya et al (2003) shows that organization decentralization often happened, lead to bigger spread of information causing each person has different piece and none has complete information. In this condition, company using earnings management can give more complete information compared to company that doesn't use earnings management.…”

Section: Shareholder Coalitionmentioning

confidence: 99%

“…Other researcher, Jiraporn et al (2006) groups earning management to two groups, beneficial earning management and opportunistic earning management. Earning management is considered useful if it can use its policy to communicate private information it has about company's prospect, which can't be seen on the company's financial report history (Arya, Glover, & Sunder, 2003;Demski, 1998;Subramanyam, 1996;Watts & Zimmerman, 1986).…”

Section: Research Backgroundmentioning

confidence: 99%

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Good Corporate Governance and Earning Management Practices: An Indonesian Cases

Murhadi

2010

SSRN Journal

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Section: Shareholder Coalitionmentioning

confidence: 99%

Section: Research Backgroundmentioning

confidence: 99%

Good Corporate Governance and Earning Management Practices: An Indonesian Cases

Murhadi

2010

SSRN Journal

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“…This notion, developed by Kanodia (1980), has been used to study the effect of periodical performance reports (e.g., Kanodia and Lee (1998)), measuring intangibles (e.g., Kanodia, Sapra, and Venugopalan (2004)), and accounting for derivatives (e.g., Melumad, Weyns, and Ziv (1999); Kanodia, Mukherji, 1 While more information is always useful in a single-person single-period decision making, the value of accounting disclosure in a multi-person or/and multi-period setting is much less clear. For example, mandating more disclosure could reduce a firm's value by altering market competition (e.g., Verrecchia (1983)) or reduce the principal's welfare in a principal-agent relation (e.g., Dye (1988); Arya, Glover, andSunder (1998, 2003)). …”

Section: Introductionmentioning

confidence: 99%

Disclosure Quality, Cost of Capital, and Investors' Welfare

Gao

2009

SSRN Journal

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It is widely believed that disclosure quality improves investors' welfare by reducing cost of capital in a competitive market. This paper examines this conventional wisdom by studying a production economy in which disclosure influences a firm's investment decisions. I demonstrate three points. First, cost of capital could increase with disclosure quality when new investment is sufficiently elastic. Second, there are plausible conditions under which disclosure quality reduces the welfare of current and/or new investors. Finally, cost of capital is not a sufficient statistic for the effects of disclosure quality on the welfare of either current or new investors. These results may help interpret the mixed empirical findings on the relation between disclosure quality and cost of capital, inform the empirical efforts to measure the economic consequences of accounting disclosure, and add to the ongoing debate on the reform of financial reporting and disclosure regulation. * This paper is part of my dissertation at Yale University. I sincerely thank my advisers, Rick Antle, John Geanakoplos, Brian Mittendorf, and Shyam Sunder (Chair), for their guidance and encouragement. I also thank Thomas Hemmer, Bjorn Jorgensen, Dong Lou, Robert E. Verrecchia, and Winnie Wen for many inspiring discussions. The paper has been substantially improved by the constructive suggestions I have received from the workshops at

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“…For public companies, surveys find that most managers of public companies are willing to sacrifice long-term value to smooth earnings (Grahan, Harvey and Rajgopal, 2005). See, however, Arya, Glover and Sunder (2003), who argue that managed earnings may be good for shareholders. 15 The survey was conducted by a major provider of online credit information for small firms in a large EU country.…”

Section: Distortion Of Competitionmentioning

confidence: 99%

Mandatory Accounting Disclosure by Small Private Companies

Arruñada

2008

SSRN Journal

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Computerised databases and the Internet have recently made publication of company accounts potentially less costly and more useful, thanks to electronic filing and universal online access to credit information systems. These developments advise against simplification policies that would reduce the scope of mandatory publication. Instead, they encourage policies pursuing a broader efficiency goal, achievable by reducing costs and enhancing value through administrative reforms of filing, archive and retrieval systems. Survey and registry evidence on how the information in the accounts is valued and used by firms fully supports these claims.

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Are Unmanaged Earnings Always Better for Shareholders?

Cited by 191 publications

References 9 publications

Good Corporate Governance and Earning Management Practices: An Indonesian Cases

Good Corporate Governance and Earning Management Practices: An Indonesian Cases

Disclosure Quality, Cost of Capital, and Investors' Welfare

Mandatory Accounting Disclosure by Small Private Companies

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