Detecting earnings management using cross-sectional abnormal accruals models

Peasnell, Ken; Pope, Peter F.; Young, Steven

doi:10.1080/00014788.2000.9728949

Cited by 296 publications

(276 citation statements)

References 12 publications

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“…Foram excluídas da amostra as empresas do setor financeiro, porque seus processos de mensuração de accruals se diferenciam substancialmente das demais companhias e, provavelmente, não são capturados adequadamente pelos modelos analisados (Peasnell, Pope, & Young, 2000), bem como o seu elevado grau de alavancagem financeira, que poderia ser interpretado como dificuldades financeiras junto às demais empresas. Além disso, as empresas com ativos operacionais líquidos negativos também foram excluídas, pois a inclusão delas afetaria o cálculo do lucro operacional anormal pelo modelo de Feltham e Ohlson (1995).…”

Section: População E Amostraunclassified

Estágios do Ciclo de Vida e Qualidade das Informações Contábeis no Brasil

et al. 2015

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O objetivo desse estudo foi analisar o efeito dos estágios de ciclo de vida (ECD) das empresas listadas na BM & FBovespa no que tange à qualidade das suas informações contábeis (QIC), entre 1995 e 2011. Após a classificação das empresas de acordo com seus ECD, foi medida a QIC por meio do conservadorismo, da persistência dos resultados e fluxos de caixa, e do gerenciamento dos resultados. Os resultados da pesquisa sugerem que existem diferenças significativas na qualidade das informações contábeis, exceto para o gerenciamento de resultados contábeis, entre os estágios de ciclo de vida das companhias abertas brasileiras.

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Section: População E Amostraunclassified

Estágios do Ciclo de Vida e Qualidade das Informações Contábeis no Brasil

et al. 2015

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“…As stated by Delgado (2003), there are a number of methods of earnings management through the use of accruals, although most of them have in common the distinction between two components: the abnormal or discretionary one and the normal or nondiscretionary one (Dechow, 1994;Peasnell et al, 2000a). Whereas non-discretionary accruals aim to improve the informational content of earnings, the abnormal accruals are means to manipulate earnings in favour of managers' interests.…”

Section: Managers' Discretionary Behaviour Earnings Management Corpmentioning

confidence: 99%

Earnings management and internal mechanisms of corporate governance: Empirical evidence from Chilean firms

López‐Iturriaga¹,

Saona²

2005

COC

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We analyze the ability of the capital structure and the ownership structure as mechanisms of control of the managers of the firms and to reduce their accounting discretionary power for a sample of Chilean firms. Using earnings management and abnormal accruals as indicators of discretionary behavior, our results show that both debt and ownership concentration reduce the managers' discretionary behavior, so we corroborate the outstanding role both mechanisms play in a country with low protection of investors' rights. At the same time, we find that earnings management is fostered by institutional investor ownership.

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“…We follow the research design proposed in several studies (e.g., Alcarria Jaime & Gill de Albornoz Noguer, 2004;Peasnell et al, 2000). To estimate the probabilities of Type I and Type II errors in the accruals model-based tests, we simulate artificial scenarios for different types and amounts of earnings manipulations and verify the frequency with which the null hypothesis of no earnings management is rejected when it is true or false, respectively.…”

Section: Simulation Proceduresmentioning

confidence: 99%

“…Since pioneering studies in the late 1980s began to investigate earnings management activity (Healy, 1985), the literature has analysed the performance of different accruals models (Alcarria Jaime & Gill de Albornoz Noguer, 2004;Dechow, Sloan, & Sweeney, 1995;Peasnell, Pope, & Young, 2000;Peek, Meuwissen, Moers, & Vanstraelen, 2013). However, scant attention has been paid to both the effects of the estimation approaches on an accruals model's performance and to the way it changes when capital markets of different countries are analysed.…”

Section: Introductionmentioning

confidence: 99%

“…For instance, in US studies the most commonly used industry classification is the twodigit Standard Industrial Classification (SIC) code, whereas researchers investigating UK listed firms frequently employ the Datastream Level 6 industry classifications (Athanasakou, Strong, & Walker, 2009;Gore, Pope, & Singh, 2007;Peasnell et al, 2000;Young, 1999). On the other hand, when studying countries with smaller capital markets, researchers use industry classifications less detailed than the two-digit SIC code and Datastream Level 6 (Alcarria Jaime & Gill de Albornoz Noguer, 2004;Saleh & Ahmed, 2005;Van Tendeloo & Vanstraelen, 2008).…”

Section: Introductionmentioning

confidence: 99%

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Estimating accruals models in Europe: industry-based approaches versus a data-driven approach

Narzo¹,

Freo

Mattei

2018

Economic Research-Ekonomska Istraživanja

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Accruals models have been estimated using a variety of approaches, but the industry-based cross-sectional approach currently seems to be the standard method. This estimation approach cannot be easily used in the vast majority of European countries where several industry groups do not have sufficient yearly observations. Using data from France, Germany, Italy and the UK, we artificially induce earnings manipulations to investigate how the ability to detect those manipulations through accruals models is affected by the use of different industry classifications. Moreover, we propose an alternative estimation approach based on a data-driven statistical procedure that provides an optimal choice of estimation samples. Our analyses show that enlarging the industry classification and/or pooling observations across years reduces the probability of discovering earnings manipulations but allows for the estimation of abnormal accruals (AA) for more firms. The data-driven approach, however, in most cases outperforms the industry-based estimation approaches without sample attrition. This result suggests that there is still ample room for improving the accruals model estimation process for capital markets of European countries. Furthermore, the analysis documents which accruals model outperforms the others in each of the four countries and the probabilities to detect earning management in a high variety of circumstances.

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Detecting earnings management using cross-sectional abnormal accruals models

Cited by 296 publications

References 12 publications

Estágios do Ciclo de Vida e Qualidade das Informações Contábeis no Brasil

Estágios do Ciclo de Vida e Qualidade das Informações Contábeis no Brasil

Earnings management and internal mechanisms of corporate governance: Empirical evidence from Chilean firms

Estimating accruals models in Europe: industry-based approaches versus a data-driven approach

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