Earnings roundup in private and public bank holding companies

Yang, Ziyun; Dong, Xiaobo

doi:10.1016/j.adiac.2015.03.004

Cited by 2 publications

(1 citation statement)

References 8 publications

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“…Another stream of literature documents discontinuities in earnings distribution at various benchmarks such as zero earnings, prior earnings, analyst forecasts and rounded numbers (Burgstahler and Dichev, 1997; Degeorge et al , 1999; Carvajal et al , 2015; Coulton et al , 2015; Kent and Routledge, 2015; Thomas, 1989; Yang and Dong, 2015; Wang et al , 2010; Lee and Choi, 2016). Debate is still going on as to the causes of the discontinuities.…”

Section: Institutional Background Literature Review and Hypotheses Developmentmentioning

confidence: 99%

The spillover effects of a bright-line regulation: evidence from China

Song

Zhou

2019

IJAIM

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Purpose The purpose of this paper is to investigate the spillover effects of a bright-line disclosure regulation that required Chinese listed firms to provide earnings forecasts if they anticipated specified, large earnings changes. Design/methodology/approach The paper examines the discontinuity of the earnings change distribution of firms listed on the Shenzhen Stock Market between 2010 and 2014. The paper finds that firms no longer subject to the bright-line test still exhibited discontinuity in earnings change distribution. The discontinuity lasted for at least three years with magnitude comparable to that of the firms still subject to the bright-line test. In addition, newly listed firms that had never experienced the bright-line test showed similar tendency to avoid the same threshold. There is some evidence that these firms’ avoidance of the −50 per cent changes was partly because of market pressure. Research limitations/implications Research on bright-line tests has to date focused on their immediate and direct effects on firms currently subject to such tests. This study finds that a bright-line disclosure regulation’s influence is not limited to the firms directly governed by the regulation. It could lead to widespread and long lasting distortions in financial reporting behaviors of firms not currently subject to such tests. Practical implications The paper has implications for regulators who study the economic consequences of bright-line regulations in general and analysts of the Chinese capital market in particular. Originality/value This is the first empirical report that bright-line disclosure regulations affected the financial reporting behavior of firms that were not directly subject to the bright-line tests.

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Section: Institutional Background Literature Review and Hypotheses Developmentmentioning

confidence: 99%

The spillover effects of a bright-line regulation: evidence from China

Song

Zhou

2019

IJAIM

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Applying Benfordʼs Law on assessing the reliability of financial information in European companies from the rental and leasing sector before and after the adoption of IFRS 16

Luty

Petković

Vavrek

2022

ZTR

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Purpose: The purpose of the manuscript is to ascertain whether the introduction of IFRS 16 changed the reliability of financial information in companies in the NACE 77 sector. Benfordʼs Law was applied to identify errors within a selected sample of Euro-pean leasing and rental companies (NACE code 77). Methodology/approach: The study examines accounting manipulations in positive profit and loss (P&L) before tax in 2015 and 2019; Part 2 explores manipulation within negative P&L before tax in 2015 and 2019; Part 3 discovers manipulations in operating revenue in 2015 and 2019. In the empirical part of the study, MAD and Kolmogorov–Smirnov tests were applied. Findings: The study confirmed that the reliability of financial information did not change even though the small differences in the distribution of digits appeared, before and after IFRS adoption. Research limitations: Limitations from this research refers to the sample size; only companies from the leasing and rental industries are included in the study Originality/value: The study adopts Benford's Law in accounting for IFRS leasing adjustments.

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Earnings roundup in private and public bank holding companies

Cited by 2 publications

References 8 publications

The spillover effects of a bright-line regulation: evidence from China

The spillover effects of a bright-line regulation: evidence from China

Applying Benfordʼs Law on assessing the reliability of financial information in European companies from the rental and leasing sector before and after the adoption of IFRS 16

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