We examine the extent to which economic incentives subject to political cost impact on accounting choice. We employ a setting with no agency factors to disguise economic incentives for earnings management. We find that profit firms manage earnings downward to reduce, but not entirely eliminate,...

The corporate governance issue has received significant attention recently at both the academic and the regulatory levels. However, there is still no generally accepted definition of the term, consensus about what it means or common system of ensuring good practice. For the emerging economies of...

Despite the enactment of accounting standards on segmental reporting around the globe, the question of segment identification still remains unresolved. The current debate between the FASB and IASC on whether a managerial or risk-return approach is most beneficial to users underscores the...

Using a large sample of small private companies, we show incremental influence of economic incentives over prescriptions from accounting standards by financial statement preparers in a code-law setting with high alignment between financial and tax reporting and no agency problems. Contrary to...

The adoption in the USA and Canada of the management approach to identifying reportable segments places relevance as the overriding concern over comparability. There is a view, however, that managers of capital may be disadvantaged by this focus. Under current UK regulations either the...

In this paper, we propose a simple test for the continuity of a distribution function or of the type of distribution. The main advantage of our test in comparison to others, as used in earnings-management studies, for example, is that no assumptions regarding the underlying distribution function...

A reformulation of the residual income model is used to generate estimates of discount rates implicit in UK security prices. The terminal value of the infinite valuation model is incorporated into the coefficient on current earnings. By varying the length of the forecast horizon, different...