Bank Earnings Management and Tail Risk during the Financial Crisis

2014 ◽  
Vol 46 (1) ◽  
pp. 171-197 ◽  
Author(s):  
LEE J. COHEN ◽  
MARCIA MILLON CORNETT ◽  
ALAN J. MARCUS ◽  
HASSAN TEHRANIAN
Keyword(s):  
Financial Crisis ◽  
Earnings Management ◽  
Tail Risk

How does real earnings management respond to the 2007-2008 financial crisis?

2020 ◽  
Vol 32 (4) ◽  
pp. 495-517
Author(s):  
Zhigang Li ◽  
Yuan-Teng Hsu ◽  
Xiang Gao
Keyword(s):  
Financial Crisis ◽  
Earnings Management ◽  
Global Financial Crisis ◽  
Probit Model ◽  
Real Earnings Management ◽  
Share Repurchases ◽  
2008 Financial Crisis ◽  
Event Window ◽  
Content Type ◽  
Dummy Variable

Purpose This paper aims to investigate the dynamics of repurchase-based earnings management vis-à-vis other real activities manipulations during the 2007–2008 financial crisis. Design/methodology/approach This paper adopts a Probit model to regress alternate real earnings management (REM) methods on a dummy variable indicating whether a firm falls in the crisis event window or not, during our 15-year sample period. This paper also detects switches made by suspected firms from repurchasing to other REM tools such as reducing discretionary expenditures. Findings This paper provides solid evidence indicating that firms suspected of earnings management have the tendency to decrease accretive share repurchases after the onset of the crisis. Conversely, the above pattern is neither observed in non-suspect firms nor over non-crisis periods. A further investigation documents that firms that switch REM during crisis can be characterized by less cash holding, smaller size, more severe liquidity shortage and/or tighter financial constraint. Originality/value This paper contributes to the literature on understanding the respective and interactive implications of both share repurchases and global financial crisis on firms’ REM activities.

The effects of global financial crisis on the relationship between CEO compensation and earnings management

2020 ◽  
Vol 28 (2) ◽  
pp. 389-408 ◽  
Author(s):  
Oheneba Assenso-Okofo ◽  
Muhammad Jahangir Ali ◽  
Kamran Ahmed
Keyword(s):  
Financial Crisis ◽  
Earnings Management ◽  
Chief Executive Officers ◽  
Ceo Compensation ◽  
Global Financial Crisis ◽  
Chief Executive ◽  
Content Type ◽  
Multivariate Tests ◽  
Executive Officers ◽  
The Relationship

Purpose This paper aims to examine the effects of global financial crisis (GFC) on chief executive officers’ (CEO) compensation and earnings management relationship. Specifically, the authors examine whether the recent financial crisis had moderated the relationship between CEO bonus and discretionary accruals. Design/methodology/approach The authors use panel data for 1,800 firm-year observations (over a period of six years from 2005 to 2010) and use univariate and multivariate tests to test their hypothesis. The authors divide the period into pre-crisis, during-crisis and post-crisis periods to examine how the different financial crisis periods affect the relationship between CEO compensation and earnings management. Various alternative tests including endogeneity test suggest that the results are robust. Findings The authors’ multivariate results indicate that the relationship between CEO’ compensation and earnings management changes because of the GFC. Practical implications The findings, therefore, justify more monitoring and scrutiny to limit the existence of opportunistic managerial behaviour and for the appropriate designing of CEO compensation packages during abnormal economic circumstances. Originality/value So far as the authors’ knowledge goes, this is the first study which examines the relationship between CEO compensation and earnings management during GFC.

scholarly journals The relationship between financial crisis and earnings management: Some evidence from the Italian context

2019 ◽  
Vol 17 (1) ◽  
pp. 325-335 ◽  
Author(s):  
Francesco Grimaldi
Keyword(s):  
At Risk ◽  
Financial Crisis ◽  
Earnings Management ◽  
Financial Crises ◽  
Macroeconomic Factors ◽  
Crisis Period ◽  
Macroeconomic Conditions ◽  
Investigation Period ◽  
Italian Context ◽  
The Relationship

The aim of this research is to investigate the relationship between the financial crisis and earnings management. Despite the wealth of research examining earnings management, we still have much to learn about the effects of macroeconomic factors on accounting discretional decisions; the recent financial crises may be one of such factors. Particularly, this study aims at investigating whether, in the Italian context, the precarious macroeconomic conditions and the consequent difficulties suffered by listed companies have constituted an incentive to implement earnings management or not. The research is based on a sample of 89 non-financial listed Italian companies and an investigation period (2005-2016) split out into three different sub-periods: a pre-crisis period (2005-2008), a crisis period (2009-2012) and a post-crisis period (2013-2016). The research is conducted using the Beneish Model, due to its capability to identify, although on the basis of likelihood, companies that potentially adopt earnings management. The results of this study suggest an overall low presence of companies at risk of manipulation throughout the period under investigation; however, the most consistent number of such companies is recorded during the pre-crisis period.

Determinants of Goodwill Impairment Losses under IAS 36: The French Case

2017 ◽  
Vol 7 (1) ◽  
pp. 343
Author(s):  
Nour Malijebtou Hassine ◽  
Faouzi Jilani
Keyword(s):  
Financial Crisis ◽  
Earnings Management ◽  
Audit Quality ◽  
Accounting Standard ◽  
Managerial Opportunism ◽  
Goodwill Impairment ◽  
French Case ◽  
The Impact ◽  
Big Four

The present paper investigates the determinants of goodwill impairment losses under IAS 36. More specifically, this study examines the impact of earnings management, corporate governance and financial crisis on goodwill impairment losses reported by French firms following the adoption of IAS 36 on purchased goodwill. Based on a sample of 730 observations from 107 groups of companies that belong to the SBF 250 over the period 2006-2012, the findings of this research confirm largely our predictions. Indeed, main results show that managers impair goodwill to meet earnings management motives linked to CEO change, earnings smoothing, big bath accounting and financial crisis. Moreover, they reveal that French firms impair goodwill to response to debt renegotiation hypothesis. In addition, the findings demonstrate that French firms audited by a Big Four auditor record lower goodwill impairment losses. Thus, they highlight the role of audit quality to constrain managerial opportunism associated to goodwill impairment.This study illuminates the accounting standard-setters in understanding the determinants of goodwill impairment losses in France under IAS 36. Therefore, it contributes to the international actual debate on goodwill and to the international accounting literature.

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