Explanatory Power of Earnings Management Models

The paper aims to investigate the effects of financial distress risk (FDR) and related party transactions (RPT) on financial reporting quality (FRQ) in an emerging market called Iran. In this study, the ordinary least squares regression (OLS) method is employed to test the hypotheses; moreover, Jones’ discretionary accruals model is used to assess the financial reporting quality (FRQ). The results show financially distressed companies have a lower financial reporting quality because they try to mislead other stakeholders about the corporate actual performance to attract more investors and lenders. Consistent with the “tunneling” or “conflict of interests transaction” assumption, our findings confirm there is a positive association between related party transactions through loan and accrual-based profit management. In other words, Iranian managers participate in loan-related party transactions to expropriate their firm’s resources and then manipulate financial statements to mask such expropriation. Finally, additional analysis indicates that financial reporting quality is seen well among firms having higher sale growth and more institutional owners, whereas the variables of ROA and financial leverage negatively affect financial information quality.

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“…. (Sarlak and Akbari 2014;Salehi et al 2020;Metzker and Siekelova 2021;Strakova and Svabova 2021;Zimon et al 2021).…”

Section: Frq Dependentunclassified

How Do Financial Distress Risk and Related Party Transactions Affect Financial Reporting Quality? Empirical Evidence from Iran

Tarighi

Hosseiny

Abbaszadeh

et al. 2022

Risks

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“…Differences in economic conditions increase innovative activities within society (ÜNLÜ, 2020). Different economic conditions are the strength in achieving balanced economic benefits (Metzker & Siekelova, 2021). Differences in the economic conditions of peasant households are spread by a type of work.…”

Section: Introductionmentioning

confidence: 99%

Caring for Different Economic Conditions to Maintain the Social Integration of Multi-Ethnic Farmers

Arsyad

Tarifu

Ridwan

2023

IJSMR

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This study examines the concern for differences in economic conditions in maintaining the social integration of multi-ethnic farmers. Data collection was carried out by interviewing informants. The selection of informants is carried out using the snowball method, that is, finding key informants who have knowledge of the differences in social conditions, the process of social integration of farmers, then key informants indicate other informants. The results showed that differences in economic conditions were based on wealth/area of rice field ownership, ownership status, labor, production and income, marketing, savings and investment, consumption patterns, and capital. This leads to inequalities and knowledge gaps, differences in the ability to cope with the problems of the production process. The solution of caring for each other can maintain the social integration of multi-ethnic farmers. Social integration of society is characterized by mutual care, order, interdependence, uniformity of thinking, the importance of social order. Strategies of maintaining social integration through concern for different economic conditions, training individuals to accept each other, adjust habits, open up, respect each other and recognize each other. The contribution of the results of this study is beneficial for multi-ethnic communities with different socioeconomic conditions in living a sustainable life together

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Earnings Management in Business Groups during the SARS-CoV-2 Pandemic

Comporek

2024

Central European Economic Journal

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This paper aims to assess the influence of the SARS-CoV-2 pandemic on the accrual-based earnings management patterns in non-financial business groups in the Warsaw Stock Exchange (WSE). This study contributes to the existing literature by considering earnings manipulation behaviours in assessing the reporting data quality, both in consolidated financial statements of business groups and individual financial statements of parent undertakings. The research methods are based on the Modified Jones Model with the simultaneous separation of individual subcategories of accruals via cross-sectional analysis and time-series data approach (separately for each business group). Empirical findings supported the presumption that earnings manipulation schemes in the SARS-CoV-2 transitional (2020) and crisis (2021) periods differed statistically compared to the previous 2019 and 2020 years, respectively. Moreover, this article proved that the company‘s potential financial distress could imply accrual-based earnings management behaviours and moderate the association between the SARS-CoV-2 pandemic and earnings manipulations activities. Finally, the obtained results confirmed that although business groups have an expanded set of balance sheet policy instruments, the quality of earnings reported in the individual financial statements of parent undertakings and the consolidated financial statements of business groups were similar during the SARS-CoV-2 pandemic.

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Explanatory Power of Earnings Management Models

Cited by 5 publications

References 15 publications

How Do Financial Distress Risk and Related Party Transactions Affect Financial Reporting Quality? Empirical Evidence from Iran

How Do Financial Distress Risk and Related Party Transactions Affect Financial Reporting Quality? Empirical Evidence from Iran

Caring for Different Economic Conditions to Maintain the Social Integration of Multi-Ethnic Farmers

Earnings Management in Business Groups during the SARS-CoV-2 Pandemic

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