Earnings Management and Accounting Income Aggregation

Jacob, John; Jørgensen, Bjørn N.

doi:10.2139/ssrn.771642

Cited by 76 publications

(58 citation statements)

References 40 publications

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“…This result suggests that the presence of the timely review reduces the fourth-quarter earnings management documented in previous studies (Givoly and Ronen 1981, Das et al 2007, Dhaliwal et al 2004, Jacob and Jorgensen 2007.…”

Section: Introductionsupporting

confidence: 55%

Value and Costs of Auditor’s Assurance: Evidence from the Review of Quarterly Financial Statements

Bédard

Courteau

2010

SSRN Journal

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Section: Introductionsupporting

confidence: 55%

Value and Costs of Auditor’s Assurance: Evidence from the Review of Quarterly Financial Statements

Bédard

Courteau

2010

SSRN Journal

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“…Baber and Kang, 2002;Beatty, Ke and Petroni, 2002;Brown and Caylor, 2004;Burgstahler et al, 2006;Collins, Pincus and Xie, 1999;Coppens and Peek, 2005;Daske et al, 2006;Easton, 1999;Hamdi and Zarai, 2012;Hayn, 1995;Holland and Ramsay, 2003;Jacob and Jorgensen, 2007;Kerstein and Rai, 2007;Phillips et al, 2004;Revsine et al, 2009). In this case, the companies' frequency distribution of earnings shows a discontinuity between the first negative earnings interval to the left of zero (which is significantly under-represented) and the first positive earnings interval to the right of zero (which is significantly over-represented).…”

Section: Literature Review and Development Of The Hypothesismentioning

confidence: 99%

Small-sized companies' earnings management: evidence from Italy

Poli

2013

ijafr

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This study explores the earnings management practices of small-sized Italian companies. Adopting the earnings distribution approach, it finds that these companies are likely to manage their earnings to achieve two earnings level targets. On the one hand, they manage their earnings to report slightly positive earnings. Those with negative earnings manage them upward to be above the zero threshold. Those with positive earnings manage them downward to bring them close to zero. On the other hand, they manage their earnings to minimize earnings changes. The main implication of the findings of this study is that the small-sized Italian companies' earnings are not unconditionally informative regarding their performance. In other words, they are of poor quality. As a result, they should be interpreted with caution by those who use financial statement information. This study mainly enriches the literature on earnings management in two ways. Firstly, it provides evidence on small-sized companies' earnings management practices which are very little explored in literature. Secondly, it provides additional evidence on the earnings management practices undertaken in the Italian setting, and so in countries which are characterized by a code law system and a close alignment between accounting and tax systems.

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“…The use of five observations is a tradeoff between a sufficiently long time-series for the income-smoothing measure and a large sample to test the model. We use annual data because there is much evidence that firms smooth fiscal-year earnings and that fourth-quarter reporting is distinctively different from that of other quarters (Jacob and Jorgensen 2003;Das and Shroff 2002).…”

Section: Income-smoothing Measurementioning

confidence: 99%

Does Income Smoothing Improve Earnings Informativeness?

Tucker

Zarowin

2005

SSRN Journal

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This paper uses a new approach to examine whether income smoothing garbles earnings information or improves the informativeness of past and current earnings about future earnings and cash flows. We measure income smoothing by the negative correlation of a firm's change in discretionary accruals with its change in pre-managed earnings. Using the approach of Collins, Kothari, Shanken and Sloan (1994), we find that change in the current stock price of higher-smoothing firms contains more information about their future earnings than does change in the stock price of lower-smoothing firms.This result is robust to decomposing earnings into cash flows and accruals and to controlling for firm size, growth, future earnings variability, private information search activities, and cross-sectional correlations.

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Earnings Management and Accounting Income Aggregation

Cited by 76 publications

References 40 publications

Value and Costs of Auditor’s Assurance: Evidence from the Review of Quarterly Financial Statements

Value and Costs of Auditor’s Assurance: Evidence from the Review of Quarterly Financial Statements

Small-sized companies' earnings management: evidence from Italy

Does Income Smoothing Improve Earnings Informativeness?

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