Does public/private status affect the level of earnings management in code-law contexts outside the United States? A study based on the Spanish case

Arnedo, Laura; Lizarraga, Fermín; Alegría, Santiago Sánchez

doi:10.1016/j.intacc.2007.06.004

Cited by 33 publications

(24 citation statements)

References 36 publications

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“…The positive sign of the variable MTB indicates that companies with higher growth expectations tend to manage more results (in accordance with Othman & Zeghal, 2006;Arnedo, Lizarraga, & Sánchez, 2007). The negative sign of LEV observed in the models indicates that companies with higher leverage tend to manage less their results, as noticed before by Dechow and Skinner (2000), Jelinek (2007) and Han, Kang, Salter, & Yoo (2010).…”

Section: Results Of Regressionsupporting

confidence: 69%

Earnings management and economic crises in the brazilian capital market

et al. 2014

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The 2008 economic crisis challenged accounting, either demanding recognition and measurement criteria well adjusted to this scenario or even questioning its ability to inform appropriately entities' financial situation before the crisis occurred. So, our purpose was to verify if during economic crises listed companies in the Brazilian capital market tended to adopt earnings management (EM) practices. Our sample consisted in 3,772 firm-years observations, in 13 years -1997 to 2009. We developed regression models considering discretionary accruals as EM proxy (dependent variable), crisis as a macroeconomic factor (dummy variable of interest), ROA, market-to-book, size, leverage, foreign direct investment (FDI) and sector as control variables. Different for previous EM studies two approaches were used in data panel regression models and multiple crises were observed simultaneously. Statistics tests revealed a significant relation between economic crisis and EM practices concerning listed companies in Brazil in both approaches used. KEY WORDS | RAE-Revista de Administração de Empresas | FGV-EAESP

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Section: Results Of Regressionsupporting

confidence: 69%

Earnings management and economic crises in the brazilian capital market

et al. 2014

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“…In addition, as suggested by other studies (e.g. Arnedo, Lizarraga, & Sánchez, 2007;Nabar & Boonlert-U-Thai, 2007), the more extensive use of accounting data in contracting, in code law countries, may also motivate managers to manipulate earnings more than in common law countries.…”

Section: Introductionmentioning

confidence: 84%

Earnings management among bankrupt non-listed firms: evidence from Spain

Campa

Miñano

2014

Spanish Journal of Finance and Accounting / Revista Española de

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We analyse whether Spanish non-listed bankrupt firms are more inclined to manage earnings in comparison with their non-bankrupt pairs during the years preceding a legal procedure for bankruptcy. We also investigate the techniques these companies employ to manage earnings and when they start using earnings manipulation practices. Analysing a matched sample of bankrupt and healthy companies, we find that bankrupt firms manage earnings upwards more than their healthy pairs. They achieve that by employing both accrual and real activity manipulation. These two practices start at least three years before the beginning of the bankruptcy procedure, but real activity manipulation stops the year immediately before filing for bankruptcy. Findings also indicate that earnings management tools change based on the industry in which firms operate and the number of years preceding the bankruptcy. This evidence is relevant to governments, monitoring bodies and all those involved in an insolvency procedure.Analizamos si las empresas españolas no cotizadas en concurso de acreedores manipulan más los estados contables en comparación con sus pares no concursadas durante los años anteriores a su entrada en el proceso legal del concurso. También investigamos las técnicas que esas empresas emplean para manipular sus resultados y cuándo empiezan a utilizar dichas prácticas. Utilizando una muestra pareada de empresas en concurso y empresas "sanas", encontramos que aquellas en concurso manipulan al alza sus resultados más que sus pares "sanas". Para manipular el resultado, nuestro estudio demuestra que las empresas utilizan tanto alteraciones en la contabilidad como decisiones operativas, con la finalidad de maximizar el resultado real. Esas dos prácticas comienzan al menos tres años antes de que empiece el concurso de acreedores, mientras que la manipulación de actividades reales finaliza el año inmediatamente anterior a su declaración de concurso. Los resultados también indican que las técnicas de manipulación del resultado dependen del sector en el que operan las empresas y del número de años anteriores al concurso. Esta evidencia es relevante para gobiernos, organismos supervisores y todos aquellos interesados en un proceso de insolvencia.Palabras clave: Manipulación del resultado; Concurso de acreedores; Marco institucional del derecho romano; Empresas no cotizadas; manipulación de actividades reales; manipulación de devengos *Corresponding author.

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“…Although less pronounced than in the United States, Arnedo et al (2007) point out that there is enough market pressure in Spain for earnings management to be used as a tool to improve the firm's image. Some papers on Spanish listed firms suggest that they may have incentives to increase earnings (Azofra et al, 2003;Gallén and Giner, 2005) in response to increased market pressure.…”

Section: Accounting Manipulation and The Role Of Debt-holders In Spainmentioning

confidence: 95%