We document the distortionary effects of accounting-based regulation on reported earnings. In India only firms with negative book value of equity (networth) can seek bankruptcy protection. Using a novel dataset of bankrupt firms from India, we show that firms manage earnings downward to seek...

We study the impact of earnings management prior to bankruptcy filing on the passage of firms through Chapter 11. Using data on 261 U.S. public firms, we construct three measures of earnings management, two of which are accounting (accrual) manipulation measures (discretionary accruals and...

Previous literature finds that situations that put managers under significant levels of pressure (e.g. IPO, upcoming credit rating changes, violation of debt covenant, etc.) might affect the way earnings are manipulated. The aim of this study is to investigate whether the pressure caused by the...

This study examines the association between real earnings management, governance attributes, and IPO failure risk. Using a sample of 4174 IPOs firms that went public over the period of 1998-2011, we find evidence that real earnings management and governance attributes are associated with IPO...

The validity of the use of financial statements as a source of information for detecting financial distress is questionable because of the opportunistic behaviour of the company’s management. This study aims to analyse the effect of accrual earnings management, real earnings management, and...

Throughout their business life cycle, firms may experience financial distress. Successful emergence from such distress is important to their multiple stakeholders. Using a sample of publicly listed firms in China that emerged from Special Treatment (an indicator of delisting risk), we focus on...

Financial misrepresentation has usually been analysed by large-scale empirical research. However the generality gained from such an approach is at the cost of understanding the rich and complex nature of financial misrepresentation in real organizations. We adopt a case study approach to gain...

Using firm-level union membership data for the period of 2002–2016, we show that firms with higher union membership are more likely to engage in real earnings management than accrual-based earnings management, with abnormal production as the dominant form of real earnings management. We...

We argue that auditors are more conservative when they face high estimation risk. To test this, we examine how auditors respond to the estimation risk associated with predicting the future bankruptcy outcomes of their audit clients. Consistent with auditors being more conservative when they face...

This paper investigates if and how a peer's bankruptcy affects financial reporting by other firms within the industry. Prior research documents that the bankruptcy filing of a peer firm has a negative capital market effects on other firms within the industry (lower stock market value and higher...