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This study examines the interaction of audit firm characteristics with two core earnings management tools: classification shifting (CS) and core accruals management (CACM). CS occurs when management intentionally misclassifies recurring operational expenses as special items to inflate...
Persistent link: https://www.econbiz.de/10012853336
We define accrual duration as the length of time between an accrual and its associated cash flow. Accrual duration and … accrual discretion are inextricably linked by the fundamentals of the accrual process because one side of an accrual pair is … more discretionary. We offer suggestions for the empirical implementation of the accrual duration approach, provide an …
Persistent link: https://www.econbiz.de/10012853694
Recent work shows that the role of accrual accounting in mitigating the timing differences between cash flows and … noise in the accrual accounting process, sophisticated users of financial information – financial analysts, are able to … extract useful information from the reported accrual accounting process, and use them in their forecasting process, are able …
Persistent link: https://www.econbiz.de/10012826688
We study the interrelation between conservatism and earnings management by examining the allowance for uncollectible accounts and its income statement counterpart, bad debt expense. We find that the allowance is conservative and that it has become more conservative over time. Conservatism may,...
Persistent link: https://www.econbiz.de/10012746741
This paper examines whether the duration of equity overvaluation influences managers' choice to use different earnings management mechanisms, and how corporate governance and the Australian Securities and Investment Commission's underlying earnings disclosure guidelines influence managers'...
Persistent link: https://www.econbiz.de/10012871568
We study the impact of short sales on accrual-based and real earnings management (EM). Based on the costs and benefits … firm engages in less accrual-based and real EM when facing short-seller scrutiny (the informational efficiency hypothesis …), or 2) a firm switches from accrual-based EM (a less sophisticated method) to real EM (a more sophisticated method), which …
Persistent link: https://www.econbiz.de/10012854137
controlled experiment, we predict and find that trust is impaired when the outcome of earnings management suggests that managers …
Persistent link: https://www.econbiz.de/10012857076
persistence of the accrual component of earnings. Another stream of the literature argues that since accruals capture growth, the … and development (R&D) represents an investment expenditure that reduces earnings but is not subject to accrual accounting …
Persistent link: https://www.econbiz.de/10012857328
Prior research shows that a greater level of cumulative accrual earnings management (AEM) over prior periods limits …
Persistent link: https://www.econbiz.de/10012859167
experiment, we predict and find that trust is impaired when the outcome of earnings management suggests that managers have put …
Persistent link: https://www.econbiz.de/10012841888