Earnings management of distressed firms during debt renegotiation

Saleh, Norman Mohd; Ahmed, Kamran

doi:10.1080/00014788.2005.9729663

Cited by 137 publications

(118 citation statements)

References 49 publications

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“…Similarly, most companies suffered a decline in profitability. Overall, the total earnings after tax of listed non-financial companies declined by RM3 billion and RM14 billion in 1997 and 1998, respectively (Saleh & Ahmed, 2005). This period of economic stress created a major challenge for managers and advisers seeking to maintain investors' confidence in IPO companies' performance.…”

Section: Institutional Contextmentioning

confidence: 99%

“…In general, research in non-IPO settings suggests that earnings management occurs in situations of increased scrutiny such as inter alia government agency investigations (Jones, 1991), price controls (Lim & Matolcsy, 1999) and company distress (Saleh & Ahmed, 2005;Ahmed et al, 2008). The direction of earnings management typically depends upon managers' incentives.…”

Section: Ipo Earnings Management In Generalmentioning

confidence: 99%

“…Indeed, prior research documents that stressful conditions such as the East Asian crisis potentially affect management's accounting choice behavior (e.g., Smith et al, 2001;Saleh & Ahmed, 2005).…”

Section: Institutional Contextmentioning

confidence: 99%

“…The direction of earnings management typically depends upon managers' incentives. For example, income-reducing earnings management is observed in price control regimes (Lim & Matolcsy, 1999), when managers potentially benefit from subsequent price increases, and during debt renegotiation, hoping to benefit from government support or improved borrowing terms during the Asian financial crisis (Saleh & Ahmed, 2005). Jaggi and Lee (2002), based on US data, find that the direction of earnings management is determined by the extent of financial distress and the outcomes of debt renegotiations.…”

Section: Ipo Earnings Management In Generalmentioning

confidence: 99%

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Earnings management in Malaysian IPOs: The East Asian crisis, ownership control, and post-IPO performance

Ahmad‐Zaluki

Campbell

Goodacre

2011

The International Journal of Accounting

125

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We find evidence of income-increasing earnings management in Malaysian IPOs, which occurs primarily for IPOs during a period of severe economic stress (the East Asian crisis). Within the high ownership concentration Malaysian market, post-IPO control concerns also appear to constrain IPO earnings management: owners seem willing to accept reduced IPO proceeds and signaling opportunities to increase the likelihood of retaining control of the company post-IPO. The requirement to provide a profit guarantee does not seem to greatly affect earnings management. IPO companies engaging in aggressive income-increasing earnings management have significantly worse market-based performance than their more conservative counterparts, but again only for IPOs issued during the economic crisis period. Overall, the results suggest that personal liquidity concerns are an important factor in IPO decisions during the economic crisis. Professor of Accounting and Finance at the University of Stirling. We appreciate the very helpful, constructive comments from Rashad Abdel-Khalik (the editor) and the two anonymous referees who have contributed significantly in helping improve the structure of the paper and the arguments therein. We have also benefited from the comments of Chris Veld, participants at the EAA Annual Conference at University College Dublin and the BAA Annual Conference at Royal Holloway, University of London. The financial support of the Malaysian government (JPA) and the Universiti Utara Malaysia is gratefully acknowledged (for Nurwati A. Ahmad-Zaluki). We thank the Public Information Centre, Kuala Lumpur Stock Exchange (Bursa Malaysia) for the usage of the library and Brahim Saadouni from the University of Manchester for the provision of his PACAP database and his collection of Malaysian prospectuses. The usual disclaimer applies. JEL classification: G32 Earnings management in Malaysian IPOs: the EastAsian crisis, ownership control and post-IPO performance AbstractWe find evidence of income-increasing earnings management in Malaysian IPOs, which occurs primarily for IPOs during a period of severe economic stress (the East Asian crisis). Within the high ownership concentration Malaysian market, post-IPO control concerns also appear to constrain IPO earnings management: owners seem willing to accept reduced IPO proceeds and signaling opportunities to increase the likelihood of retaining control of the company post-IPO. The requirement to provide a profit guarantee does not seem to greatly affect earnings management. IPO companies engaging in aggressive incomeincreasing earnings management have significantly worse market-based performance than their more conservative counterparts, but again only for IPOs issued during the economic crisis period. Overall, the results suggest that personal liquidity concerns are an important factor in IPO decisions during the economic crisis. JEL classification: G32

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Section: Institutional Contextmentioning

confidence: 99%

Section: Ipo Earnings Management In Generalmentioning

confidence: 99%

Section: Institutional Contextmentioning

confidence: 99%

Section: Ipo Earnings Management In Generalmentioning

confidence: 99%

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Earnings management in Malaysian IPOs: The East Asian crisis, ownership control, and post-IPO performance

Ahmad‐Zaluki

Campbell

Goodacre

2011

The International Journal of Accounting

125

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“…Sementara itu DeAngelo et al (1994) dan Saleh & Ahmed (2005) menemukan bahwa manajer lebih mungkin melakukannya dengan teknik menurunkan laba. Di Indonesia terdapat juga beberapa penelitian yang hasilnya serupa dengan hasil tersebut di atas, yaitu yang dilakukan oleh Kusumawati & Sasongko (2005), Syam (2004), Andriyani (2004), dan Djakman (2003).…”

Section: Pendahuluanunclassified

Manajemen Laba: Pro-Kontra Pemaknaan Antara Kreditur Dan Debitur Dalam Proses Pembiayaan Kredit

Febriyanti¹,

Sawarjuwono²,

Pratama³

2014

jmk

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AbstrakManajemen laba menjadi topik pembahasan yang menarik. Salah satu pemikirannya yaitu selama dilakukan sesuai dengan Standar Akuntansi Keuangan Indonesia sulit dikatakan sebagai manajemen laba. Namun demikian, akuntan cenderung memanfaatkan perlakuan akuntansi untuk memenuhi kepentingan tertentu. Sebaliknya, kreditur, dalam pengambilan keputusan pembiayaannya tidak semata-mata mempertimbangkan terjadi atau tidaknya manajemen laba, tetapi menggunakan berbagai teknik analisa lain yang lebih komprehensif. Penelitian ini menerapkan unobtrusive observation. Dengan penelitian secara tersembunyi, dapat diungkap terjadinya manajemen laba serta berbagai pertimbangan debitur maupun kreditur dalam menyikapinya. PENDAHULUANDalam menyusun sebuah laporan keuangan, akuntan tidak dapat dilepaskan dari subyektivitasnya (Jusuf, 2010). Praktik manajemen laba (earnings management) telah menjadi isu dan fenomena umum di Indonesia (Leuz et al., 2003). Hal demikian nampaknya cenderung selalu terjadi, mengingat akuntan dalam perusahaan mempunyai tujuan khusus (Scott, 2006) atau karena intervensi manajemen (Schipper, 1989). Hal ini dimungkinkan karena akuntan memiliki kesempatan, kekuasaan dan pengetahuan untuk mengatur seberapa besar laba yang diinginkan. Selain itu, manajemen laba dimungkinkan pula oleh Standar Akuntansi Keuangan (SAK). Dalam hal ini akuntan dapat mempengaruhi angka laba melalui pemilihan metode atau kebijakan akuntansi yang diperbolehkan dalam SAK.Terjadi atau tidaknya praktik manajemen laba telah diteliti oleh berbagai peneliti, diantaranya Dechow & Skinner (2000), Gosh (2010), Palliam & Shalhoub (2003), Riduwan (2010), Sharma et al. (2011). Dechow & Skinner (2000) dan Riduwan (2010) menjelaskan hal yang serupa, yaitu adanya sikap pro dan kontra atas praktik ini. Hasilnya mengungkapkan bahwa pihak yang pro memandang bahwa manajemen laba boleh dilakukan dan bukan merupakan perilaku koruptif sepanjang dilakukan dalam koridor prinsip akuntansi berterima umum. Sebaliknya, pihak yang kontra menyatakan bahwa manajemen laba tidak berbeda dengan tindakan memanipulasi laba.Demikian pula yang dilakukan oleh Gosh (2010), dengan istilah creative accounting, didapati bahwa praktik ini menyebabkan collapse-nya beberapa perusahaan international. Sejalan dengan beragamnya kasus praktik tersebut, Palliam & Shalhoub (2003) menemukan salah satu tekniknya yaitu dengan cara penundaan transaksi yang berakibat pada nilai besaran laba. Sharma et al. (2011) meneliti bagai-

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Studying the relationship between managerial ability and real earnings management in economic and financial crisis conditions

Oskouei

Sureshjani

2020

Int. J Fin Econ

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Managers with different abilities may make various decisions in economic and financial crisis conditions. Real earnings management, as an important issue, is in the centre of attention for many managers in a crisis condition. In this paper, the role of managerial ability in real earnings management is studied in conditions of economic and financial crisis. This study shows that the managers with higher ability take less usage of real earnings management. The results also indicate that managerial ability, economic and financial crisis have significant and negative effects on real earnings management. This negative effect of managerial ability on real earnings management increases in the conditions of economic crisis. Paying attention to the firms' managerial ability, especially in critical conditions, will lead to more accurate decisions by activist investors.

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Earnings management of distressed firms during debt renegotiation

Cited by 137 publications

References 49 publications

Earnings management in Malaysian IPOs: The East Asian crisis, ownership control, and post-IPO performance

Earnings management in Malaysian IPOs: The East Asian crisis, ownership control, and post-IPO performance

Manajemen Laba: Pro-Kontra Pemaknaan Antara Kreditur Dan Debitur Dalam Proses Pembiayaan Kredit

Studying the relationship between managerial ability and real earnings management in economic and financial crisis conditions

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