Investor protection, prospect theory, and earnings management: An international comparison of the banking industry

Shen, Chung‐Hua; Chih, Hsiang-Lin

doi:10.1016/j.jbankfin.2004.10.004

Cited by 241 publications

(223 citation statements)

References 13 publications

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“…Although there are numerous studies on earnings management in different countries, we still find limited studies in the Indian context. Shen and Chih (2005) study provides evidence of earnings management in Indian banking industry. Further, Chipalkatti, Le, and Rishi (2007) detected that banks with low profitability are mainly indulged in earnings management.…”

Section: Review Of Literaturementioning

confidence: 97%

Is Earnings Management a Technique to Reduce Cost of Capital? Exploratory Study on Indian Companies

Patro¹,

Kanagaraj²

2016

JMAA

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Earnings management has attracted lots of academicians towards the research due to the emerging frauds and downfall of great corporate giants of the world. Mainly earnings measurement is based on the accounting estimates which managers can easily manipulate for their self-interest. The study investigates the relationship between cost of capital and the earnings measurement for the Indian firms. Measurement of earnings is mostly computed by taking either discretionary accruals (DAC) or non-discretionary accruals (NDAC). Present study has used Dechow, Sloan, and Sweeney (1995) model for earnings measurement and for analyzing the results. Panel data regression has also been used. Findings of the study conclude that DAC has a significant influence on cost of capital, but NDAC has no influence.

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Section: Review Of Literaturementioning

confidence: 97%

Is Earnings Management a Technique to Reduce Cost of Capital? Exploratory Study on Indian Companies

Patro¹,

Kanagaraj²

2016

JMAA

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“…The existing literature on earnings management in Indian companies is rather limited, and has mostly concentrated on the practice of earnings management prevalent in banks and large corporates (Shen & Chih, 2005;Chipalkatti & Rishi, 2007;Sarkar et al, 2008;Rudra & Bhattacharjee, 2012). A recent study on a larger scale by Ajit et al (2013) attempted to examine the extent of earnings management in listed Indian companies during the period of 2008-2011.…”

Section: Resultsmentioning

confidence: 99%

Earnings Management Practices in Indian Companies: A Cross-Sectional Analysis

Mishra¹,

Malhotra²

2016

JMAA

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Corporate accounting frauds over the last two decades have caused massive erosion of investor wealth and shattered public confidence in regulators and capital markets. Deliberate manipulation of financial numbers by a company is rarely a one-off event; it is more a culture of widespread earnings management that permeates an organization and eventually leads to a full-blown accounting fraud. This paper looks at earnings management practices in Indian companies and examines the extent of earnings management prevalent across firms of varying market capitalization. The present study examines 130 listed Indian companies during the period of 2013-2015. The findings of this study provide a measure of the quality of financial reporting in India. Modified Jones model (1995) is used to estimate discretionary accruals (DA), which is considered as a proxy for earnings management. The average DA is estimated at 5.6% of the total assets of the firms, which is comparable to the estimates in other parts of the world (about 1%-5% of total assets). A sector-specific analysis reveals presence of higher earnings manipulation in the consumer durable and energy sectors. Large cap companies are found to show a lower level of earnings management as compared to the small-cap firms. The study also finds a dip in the magnitude of DA in 2015, which is the first year of application of the new Companies Act 2013. Subsequent years will reveal the true success of the new Act in enforcing a stricter regime of corporate governance and greater accountability of corporate boards and audit committees. International studies point towards a high degree of correlation between effective audit committees and lower levels of earnings management in companies. Further work in this field from an Indian context will help identify factors that have a constraining effect on earnings management, and ultimately help preserve the sanctity of reported financial numbers.

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“…Não obstante essas limitações quanto à metodologia, é importante ressaltar que a distribuição de frequência com um comportamento "anormal" em torno de zero tem sido usualmente assumida na literatura como um indicativo da modalidade de gerenciamento analisada nesta pesquisa (Burgstahler & Dichev, 1997, Martinez, 2001, Shen & Chih, 2005, Maia et al, 2013, Bressan, Bressan & Silva, 2015, Bressan, Santos & Bressan, 2015. Além disso, segundo Martinez (2013), essa metodologia tem como grande vantagem a possibilidade de identificar o gerenciamento de resultados sem incorrer nos erros de mensuração e na incorreta especificação, por exemplo, nos modelos de accruals discricionários.…”

Section: Considerações Finaisunclassified

Gerenciamento de Resultados em Bancos: Indícios relacionados à aversão a divulgação de prejuízos

Sousa¹

2018

RECFin

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Investor protection, prospect theory, and earnings management: An international comparison of the banking industry

Cited by 241 publications

References 13 publications

Is Earnings Management a Technique to Reduce Cost of Capital? Exploratory Study on Indian Companies

Is Earnings Management a Technique to Reduce Cost of Capital? Exploratory Study on Indian Companies

Earnings Management Practices in Indian Companies: A Cross-Sectional Analysis

Gerenciamento de Resultados em Bancos: Indícios relacionados à aversão a divulgação de prejuízos

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