Revenues and expenses are fundamentally proportional to one another, but are likely to be disproportionally affected by transitory items or economic shocks. We build on this observation and propose a new measure of sustainable earnings based on deviations from normal profit margins. While some...

Though ample empirical evidence alludes to the importance of disaggregated accounting data in the context of earnings management, extant accounting theory considers biases in reporting earnings mostly at the aggregated level of the reported earnings. By analyzing reporting manipulations at the...

Revenues and expenses are fundamentally proportional to one another, but are likely to be disproportionally affected by transitory items or economic shocks. We build on this observation and propose a new measure of sustainable earnings based on deviations from normal profit margins. While some...