Earnings Management to Exceed Thresholds.
Earnings provide important information for investment decisions. Thus, executives--who are monitored by investors, directors, customers, and suppliers--acting in self-interest and at times for shareholders, have strong incentives to manage earnings. The authors introduce behavioral thresholds for earnings management. A model shows how thresholds induce specific types of earnings management. Empirical explorations identify earnings management to exceed each of three thresholds: report positive profits, sustain recent performance, and meet analysts' expectations. The positive profits threshold proves predominant. The future performance of firms suspect for boosting earnings just across a threshold is poorer than that of control group firms. Copyright 1999 by University of Chicago Press.
Year of publication: |
1999
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Authors: | Degeorge, Francois ; Patel, Jayendu ; Zeckhauser, Richard |
Published in: |
The Journal of Business. - University of Chicago Press. - Vol. 72.1999, 1, p. 1-33
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Publisher: |
University of Chicago Press |
Saved in:
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