We examine whether UK firms engage in earnings management or forecast guidance to ensure that their reported earnings meet analyst earnings expectations. We explore two earnings management mechanisms: a) positive abnormal working capital accruals and b) classification shifting of core expenses...

The purpose of this study is to investigate into the discretionary accruals of the client companies of sanctioned auditors before sanction enforcements and changes thereafter. We find that signed discretionary accruals of the sanctioned auditors' client companies are significantly more favorable...

New accounting standards require firms to expense the costs of option-based compensation (OBC). Earlier research has documented that firms in the U.S. generally underreport the values of OBC by manipulating the model inputs used for valuation purposes. This paper examines the information on and...

In this paper we empirically evaluate the widespread belief of managers that income smoothing results into lower stock market risk. Multivariate regressions confirm that a negative relation exists between discretionary income smoothing and idiosyncratic volatility. Further analysis indicates...

Good corporate reputations are critical because of their potential for value creation, but also because their intangible character makes replication by competing firms considerably more difficult. This paper tests the relationship between the reputation and the earnings quality. Though I find no...

It would be interesting to know how the theories and hypotheses in auditing developed for a mature economy work in an emerging market. This paper uses the merger of Diwan, Ernst amp; Young and J. T. Lai amp; Co., CPAs in Taiwan in 2000 as a target to study the effects of a CPA-firm merger on...

This paper examines whether the type of jointly controlled entity influences the management choice to report interests in this kind of joint venture using the equity method or proportionate consolidation. We address this gap in the accounting choice literature by exploiting the U.K. setting...

This paper conducts an empirical investigation of the relationship between information asymmetry and real activities manipulation. When information asymmetry is high, stakeholders do not have sufficient resource, incentives, or access to relevant information to monitor manager‘s actions, which...

The purpose of our research is to determine the likelihood of financial statement manipulations in companies throughout a variety of emerging market countries and compare this potential to that of firms within the United States. We do this by utilizing the Fraud Score Model as set forth by...

This study explores the market response to achieving analyst earnings expectations, distinguishing between expectations achieved through earnings forecast guidance and earnings management. We consider three earnings management tools: real earnings management, working capital accruals management,...