Do firms manage earnings to meet dividend thresholds?

The Level of Conservatism in Accounting Policies and Its Effect on Earnings Management

“…For control variables, the results document that company's size is significantly and negatively related to earnings management. This result is consistent with (Kamarudin et al, 2003;Naveen et al, 2008). However, performance is found to be significantly and negatively related to earnings management inconsistent with (Bartov et al, 2000;Chen et al, 2006).…”

Large shareholders and the pressure to manage earnings

“…4 In Guthrie et al (2009), we extend this caveat to the reliability of 3 The empirical literature has identified several opportunities to enrich current shareholders at the expense of outsiders without taking shareholder benefits explicitly into consideration. Examples include IPOs (Teoh et al, 1998a), SEOs (Rangan, 1998 andTeoh et al, 1998b), stock-for-stock acquisitions (Erickson and Wang, 1999), debt-covenant restrictions (DeFond and Jiambalvo, 1994), and earnings thresholds (Burgstahler and Dichev, 1997;Daniel et al, 2008;and Degeorge et al, 1999). 4 Note that Zhong et al and our findings are not at odds with each other.…”

Conditional accounting conservatism and future negative surprises: An empirical investigation

“…Moreover, due to negative effects of dividend decreases on firms' stock prices, Daniel et al (2007) show that firms manage earnings upward to avoid dividend decreases. Kothari et al (2009) show that the market reacts particularly negatively to the news of dividend decreases.…”