Estimating accruals models in Europe: industry-based approaches versus a data-driven approach

Narzo, Antonio F Di; Freo, Marzia; Mattei, Marco Maria

doi:10.1080/1331677x.2017.1421991

Cited by 6 publications

(2 citation statements)

References 46 publications

(63 reference statements)

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“…Secondly, some models require a fairly large number of observations and variables, which make their estimates much more restrictive (Degeorge et al, 2013). Thirdly, the most popular estimation approach is the cross-sectional by year and industry approach and the SIC codes at two-digit level are the most common industry classification used (Di Narzo et al, 2018). However, this approach is impossible due to the lack of sufficient observations in each two-digit SIC code (Ecker et al, 2013).…”

Section: Internal Control Measurementioning

confidence: 99%

Internal control and real earnings management in the French context

Wali

Masmoudi

2020

JFRA

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Purpose This study aims to examine whether the internal control system quality in the French context improve the information quality having been reflected by the level of real earnings management (REM) measured by inventory overproduction, discretionary expenses reduction and sales manipulation. Design/methodology/approach The research uses a multiple regression analysis to examine the association between internal control and REM. The years 2010-2015 are used as analysis period by focusing on the French context. Three panel data are applied to the companies belonging to the Cotation Assistée en Continu (CAC) 40 index for the entire study period. Findings The results show that high internal control index has a negative impact on the REM and that better internal control indeed makes financial reporting more credible to investors. Further, the results demonstrate that control environment, risk assessment, control activities and monitor are the components that mainly affect REM. Originality/value The results contribute to the literature dealing with the relationship between internal control quality and REM by shedding light on the importance of internal control quality in improving information quality in the French context. Moreover, this study is using a quantitative measure of the internal control quality while much of the prior literature uses material weaknesses to estimate the effectiveness of internal control system.

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Section: Internal Control Measurementioning

confidence: 99%

Internal control and real earnings management in the French context

Wali

Masmoudi

2020

JFRA

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“…The authors consider their conclusions to be robust with respect to the latest innovations in proxies for the topic of earnings management. Di Narzo et al (2018) in their study used data from France, Germany, Italy and the UK to investigate how the ability to detect earnings manipulations through accruals models are affected by the use of different industry classifications. Their analyses showed that enlarging the industry classification reduces the probability of discovering earnings manipulations.…”

Section: Literature Reviewmentioning

confidence: 99%

Dependency Analysis Between Various Profit Measures and Corporate Total Assets for Visegrad Group’s Business Entities

et al. 2020

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Background and Purpose: Models of identifying and predicting earnings management in companies by using accruals are in general based on the dependence between total assets of companies and various profit measures. In this paper, we focused on an initial dependency analysis between these business indicators in the Visegrad group’s business entities. We explore the mentioned relationships, verify, and quantify the strength of the dependencies between earnings levels of companies (in terms of economic evaluation of the return on business capital in absolute terms) and the value of their total assets (i.e. business capital tied in the assets without its further classification and analysis).Methodology: We use descriptive statistics as well as a correlation analysis based on the real business data on almost 300 thousand companies in the V4 countries from the Amadeus database, covering the period from 2013 to 2017. Finally, we use a comparative analysis to identify disproportion among the results that were found out for each of the analysed countries.Results: The analysis showed that Slovak companies have the average values of profit measures and total assets comparable to Hungarian companies. Czech and Polish companies have several times higher average values of profit measures and also of total assets than Slovak and Hungarian companies. The analysis of the development of the profit measures and the total assets of the companies over the years showed significant differences across the four countries during the period covered by this study.Conclusion: The analysis of relationships between total assets of the companies and their profit measures showed that the strength of these dependencies among countries is very similar, and over the years, these results did not change. The results of this study can be further used in the creation of the earnings management model in enterprises, both in Slovakia and in other V4 countries.

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Earnings management in global background

Straková

2020

SHS Web Conf.

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Earnings management is a general term in accounting decisions that may affect the results of the financial statements. Financial statements represent the core of information is used not only by internal but also external entities. Their role is to provide a true picture of the financial situation and the performance of a particular business in an international environment. In practice, however, there may be opportunities to influence accounting information using a variety of methods and techniques, and as a result, the financial statements lose their function and misrepresent the accounting data, resulting in profit manipulation. Profit manipulation is also dealt with by the phenomenon of earnings management, which is a topical topic in the world of finance in the international environment. This is a very complex and multifaceted phenomenon occurring in companies, irrespective of their territory, area of business or size. Several profit models are used to measure and detect earnings management, whose detection capability varies. This paper focuses on the selection of profit models according to individual forms of earnings management and the assessment of variable profit models in the V4 countries.

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Estimating accruals models in Europe: industry-based approaches versus a data-driven approach

Cited by 6 publications

References 46 publications

Internal control and real earnings management in the French context

Internal control and real earnings management in the French context

Dependency Analysis Between Various Profit Measures and Corporate Total Assets for Visegrad Group’s Business Entities

Earnings management in global background

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