We show that firms 'in danger' of being delisted from a stock market (NASDAQ) report higher performance-adjusted discretionary accruals and the inflated accruals are associated with an increased likelihood of maintained listing. Accruals of firms 'in danger' are less positive in fiscal quarters...

Empirical research from the first years following SOX suggests that firms improve accruals quality following restatements, but both the number and materiality of restatements have declined since then. This decline may affect firms' responses to restatements and hence we re-examine whether...

We examine whether initial public offering (IPO) firms exercise discretion over an individual accrual account on the balance sheet - the allowance for uncollectible accounts - and an individual accrual account on the income statement - bad debt expense. Our research design exploits a unique...

The purpose of our study is to further understand managerial incentives that affect the volatility of reported fiscal-year earnings. We do this by examining income smoothing based on pseudo fiscal years. For each firm, we create pseudo-year earnings using four consecutive quarters other than the...

The present paper aims to provide empirical evidence regarding the impact of shareholder activism on earnings management. Specifically, it is focused on investigating the moderating role of an external governance mechanism such as external audit quality. Based on a sample of French companies...

In this paper, we provide empirical evidence for the impact of disciplinary sanctions imposed on Spanish auditing firms and their engagement partners. The disciplinary sanctions resulted from external investigations, which revealed misapplications of auditing standards. In particular, we...

Financial managers intentionally use the legal manipulation of earnings to the business development. Earnings management is a widespread business finance phenomenon. The approaches and the ways of this practice are marked by many parallels. The main target of the article is to show the clusters...

Managers appear to inflate non-investment accruals and then adjust financing decisions to capitalize on such inflation. Using a large sample of corporate seasoned equity offerings (SEOs) for the period 1972 - 2017, we find that firms which adjust non-investment accruals to inflate pre-issue...

We analyse to what extent the accrual anomaly is related to the choice of the accounting system as well as firm-level heterogeneity in corporate governance mechanisms. Using a unique dataset of listed German firms over the period 1995 to 2005 we first corroborate former results indicating that...

This paper examines the consequences of Financial Reporting Quality (FRQ) on Corporate Performance, using three proxies of FRQ: (i) earnings quality; (ii) conservatism; and (iii) accruals quality. Our purpose is to analyze the effect of a good FRQ on financial performance (FP) measured by the...