The relation between earnings management and financial statement fraud

Perols, Johan; Lougee, Barbara A.

doi:10.1016/j.adiac.2010.10.004

Cited by 169 publications

(150 citation statements)

References 24 publications

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“…The strength of bank monitoring seems to be affected only by (1) the magnitude of a bank loan, (2) the reputation (rank) of a lead bank, and (3) the length of a bank loan. As stated by Perols and Lougee (2011), earnings management could becomes an indicator the firms that has conducted fraud, a company that have a high monitoring level by the banks should have lower possibility to commit accounting fraud.…”

Section: Bank Monitoringmentioning

confidence: 99%

“…Earning management which violates the accounting standard compliance will be considered as accounting fraud. Perols and Lougee (2011) explain that a fraud exists if the manager uses his valuation when making the financial report and when it engineers the transaction so that the financial report will give a different result from the real economic situation of the company, and this act is done by violating the Generally Accepted Accounting Principles (GAAP). They find fraud firms are more likely to have managed earnings in prior years and that earnings management in prior years is associated with a higher likelihood that firms meet or beat analyst forecasts or inflate revenue.…”

Section: Financial Statement Fraudmentioning

confidence: 99%

“…Earning management has become an indicator to detect companies that have conducted fraud (Perols and Lougee 2011). Companies that are in the young life cycle stage (growth stage) will conduct a management to reduce profit, and companies that are in the mature life cycle have tendencies to maximize company's profit.…”

Section: Company Life Cyclementioning

confidence: 99%

“…Companies that are in the young life cycle stage (growth stage) will conduct a management to reduce profit, and companies that are in the mature life cycle have tendencies to maximize company's profit. According to the definition proposed by Perols and Lougee (2011), they define manipulation of the financial report or have been conducting a profit management (or both). Thus, companies that are at the young and mature stage will frequently commit fraud.…”

Section: Company Life Cyclementioning

confidence: 99%

See 3 more Smart Citations

The Influence of Board of Commissioners and Audit Committee Effectiveness, Ownership Structure, Bank Monitoring, and Firm Life Cycle on Accounting Fraud

Kusumawati¹,

Hermawan²

2013

JAKI

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Financial statement fraud has cost market participants, including investors, employees, creditors, and pensioners. Capital market participants expect active and vigilant AbstrakKecurangan pelaporan keuangan menimbulkan kerugian bagi pelaku pasar, antara lain investor, pegawai, kreditur. Kecurangan ini juga merupakan ancaman yang serius bagi para pelaku pasar modal. Pelaku pasar modal mengharapkan laporan keuangan yang transparan, berkualitas, dan dapat dipercaya integritasnya. Penelitian ini bertujuan menguji pengaruh efektifitas peran dewan komisaris dan komite audit, struktur kepemilikan, peran monitoring bank, dan siklus hidup perusahaan terhadap probabilita terjadinya kecurangan pelaporan keuangan. Pengujian hipotesis dilakukan dengan menggunakan metode regresi logistik dengan menggunakan data sanksi yang dikenakan pada perusahaan yang melakukan kecurangan pelaporan keuangan, yang diperoleh dari Bapepam-LK dari tahun 2005 sampai dengan 2011. Hasil penelitian ini menunjukkan bahwa efektifitas peran komite audit dan struktur kepemilikan keluarga berpengaruh negatif terhadap probabilita terjadinya kecurangan pelaporan keuangan. Hal ini mengindikasikan efektifitas komite audit dan kepemilikan yang dikendalikan oleh keluarga dapat mengurangi probabilita terjadinya kecurangan pelaporan keuangan.Kata Kunci : fraud, corporate governance, efektifitas komite audit, struktur kepemilikan, pengawasan bank, siklus hidup perusahaan.

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Section: Bank Monitoringmentioning

confidence: 99%

Section: Financial Statement Fraudmentioning

confidence: 99%

Section: Company Life Cyclementioning

confidence: 99%

Section: Company Life Cyclementioning

confidence: 99%

See 2 more Smart Citations

The Influence of Board of Commissioners and Audit Committee Effectiveness, Ownership Structure, Bank Monitoring, and Firm Life Cycle on Accounting Fraud

Kusumawati¹,

Hermawan²

2013

JAKI

View full text Add to dashboard Cite

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“…Such practices include all techniques related to revenue-boosting and expense downgradings like income smoothing and tax avoidance (Perols & Lougee, 2011). There is a slight distinction between earning management and manipulation which is a legal aspect.…”

Section: Resultsmentioning

confidence: 99%

Fraud in Rights and Contracts: A Review of Bankruptcy Case of Livent Inc. Based on Governance, Risk, and Compliance (GRC) Framework

Widhoyoko¹

2017

Binus Business Review

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This research discussed the accounting scandal in the perspective of governance, risk, and compliance using Governance, Risk, and Compliance (GRC) framework. The purpose of the research was to highlight early business fraud that usually initiated by the company in boosting up the revenue during the Initial public offering (IPO) processes. This research focused on a case showing how a business could make the wrong statement to the investors through real and lawful future contracts with unqualified audit opinion. Structurally, this research was done through the action research method in pointing out all the directors' failures in their function to hold the fiduciary duty to exercise their responsibility. Based on the analysis, it is highlighted that directors in the aspect of (1) governance decisive, they fail to set proportional target, provide ethical value, and react positively to maintain the company sustainability; (2) compliance submissive, they do not submit the accounting standards through undisclosed third-party agreement, misrepresentation of revenue recognition, and mistreatment of expense omission; (3) risk preventive, they fail to assess the risk occurs from legal aspect of conflict of interest, long-term contractual and engagement risks, and insufficient future cash flow.

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Exploring the relationship between corporate ESG performance and corporate violation: Based on the fraud triangle theory

Wang,

Chen,

Wang

2024

Corp Soc Responsibility Env

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Enterprises should strive for sustainable development since it is a vital component of the economy. Sustainable development serves as a safeguard against elements that might negatively impact the future development of their companies. This article aims to explore the influence of corporate environmental, social, and governance (ESG) performance on corporate violation using Chinese A‐share listed firms as a sample. We discover that corporate ESG performance considerably discourages corporate violation behavior, reducing the risk of corporate violations. Based on the fraud triangle theory, we also show that corporate ESG performance reduces the opportunity of corporate violations by improving information transparency, reduces the pressure of corporate violations by alleviating financing constraints, and reduces the rationalization of corporate violations by increasing media attention. By examining particular corporate violations, we document that corporate ESG performance is more effective for disclosure violations and general violations in corporate governance. Further analysis shows that corporate ESG performance has a considerable impact on companies in nonstate‐owned and small‐company subsamples. These results add to the literature and provide theoretical insights for governors, regulators, company executives, auditors, and other stakeholders.

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The relation between earnings management and financial statement fraud

Cited by 169 publications

References 24 publications

The Influence of Board of Commissioners and Audit Committee Effectiveness, Ownership Structure, Bank Monitoring, and Firm Life Cycle on Accounting Fraud

The Influence of Board of Commissioners and Audit Committee Effectiveness, Ownership Structure, Bank Monitoring, and Firm Life Cycle on Accounting Fraud

Fraud in Rights and Contracts: A Review of Bankruptcy Case of Livent Inc. Based on Governance, Risk, and Compliance (GRC) Framework

Exploring the relationship between corporate ESG performance and corporate violation: Based on the fraud triangle theory

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