Fair Value Accounting and Gains from Asset Securitizations: A Convenient Earnings Management Tool with Compensation Side-Benefits

2009 ◽  
Author(s):  
Patricia M. Dechow ◽  
Linda A. Myers ◽  
Catherine Shakespeare
Keyword(s):  
Earnings Management ◽  
Fair Value ◽  
Management Tool ◽  
Fair Value Accounting

scholarly journals Fair Value Accounting and Earnings Management Using LLP and Realized Gains and Losses: Study in Banking Industry Listed on Indonesia Stock Exchange

2018 ◽  
Vol 14 (2) ◽  
pp. 126-137
Author(s):  
Ice Maria Ulfa ◽  
Bambang Subroto ◽  
Zaki Baridwan
Keyword(s):  
Earnings Management ◽  
Empirical Evidence ◽  
Banking Industry ◽  
Stock Exchange ◽  
Fair Value ◽  
Fair Value Accounting ◽  
Loan Loss ◽  
Trade Off ◽  
Gains And Losses ◽  
The Impact

Abstract: Fair Value Accounting and Earnings Management Using LLP and Realized Gains and Losses: Study in Banking Industry Listed on Indonesia Stock Exchange. This study examines whether earnings management can be limited by the implementation of fair value accounting in banking industry. The main contribution of this study is  providing provide empirical evidence about the impact of fair value accounting on earnings management in Indonesia. Earnings management is proxied by loan loss provision (LLP), the realized of gains and losses, and the trade-off between realized gains and losses and LLP following Bratten et al (2013). The study provides empirical evidence that earnings management is still performed by banks, by using LLP, realized gains and losses and also occurs trade-off between LLP and realized gains and losses as means to perform earnings management in accordance with the needs of management. If banks are exposed to fair value accounting, managers will have more flexibility in reporting banks’ financial performance to present a desired earning, by  providing them with additional earning managements tools. These findings can be informative for policymakers, banking practitioners, and academics.  Keywords: earnings management, fair value accounting, LLP, realized gains and losses, trade-off LLP and realized gains and losses.Abstrak: Akuntansi Nilai Wajar dan Manajemen Laba menggunakan CKPN dan Realized Gains and Losses: Studi pada Industri Perbankan yang terdaftar di Bursa Efek Indonesia. Studi ini bertujuan untuk meneliti apakah manajemen laba dapat dibatasi oleh penerapan akuntansi nilai wajar dalam industri perbankan. Kontribusi dari penelitian ini adalah untuk memberikan bukti empiris tentang dampak penerapan akuntansi nilai wajar pada manajemen laba di Indonesia. Manajemen laba diproksikan oleh cadangan kerugian penurunan nilai (CKPN), realized of gains and losses, dan trade-off antara realized of gains and losses dan CKPN mengikuti model penelitian Bratten et al (2013). Studi ini memberikan bukti empiris bahwa manajemen laba masih dilakukan oleh bank menggunakan CKPN, realized of gains and losses dan juga terjadi trade-off antara CKPN dan realized of gains and losses sebagai sarana manajemen laba sesuai dengan kebutuhan manajemen. Konsekuensi dari paparan bank terhadap akuntansi nilai wajar dapat meningkatkan fleksibilitas manajer dalam melaporkan penghasilan yang diinginkan dengan memberikan mereka alat manajemen laba. Temuan-temuan tersebut dapat bersifat informatif bagi pembuat kebijakan, anggota industri perbankan, dan akademisi. Kata kunci: manajemen laba, akuntansi nilai wajar, CKPN, realized gains and losses, trade-off CKPN dan realized gains and losses.

scholarly journals THE APPLICATION OF FAIR VALUE ACCOUNTING IN BOSNIA AND HERZEGOVINA

2019 ◽  
Vol 17 (31) ◽  
Author(s):  
Amira Pobrić
Keyword(s):  
Earnings Management ◽  
Bosnia And Herzegovina ◽  
Fair Value ◽  
Financial Statement ◽  
Fair Value Accounting ◽  
Fair Value Measurement ◽  
Value Measurement ◽  
Level 2 ◽  
Infor Mation

This study investigates the application of fair value ac- counting in companies in Bosnia and Herzegovina. The study was conducted on a sample of 190 companies. The application of fair value accounting causes a lot of controversy related to the relevance and reliability of fair value information. It is believed that the extent to which fair value measurement is used reflects attitudes of financial statement preparers about the usefulness of this model at its best. The findings of this study sug- gest that most companies in Bosnia and Herzegovina do not have tendency to apply fair value accounting. It is found that half of the companies in the sample do not use fair value accounting at all. Almost half of the com- panies that use fair value accounting use it just because they own assets that require fair value measurement. Fair value accounting is much more used in financial and larger companies than in non-financial and smaller companies. Companies mostly use fair value accounting for the measurement of investment property. However, they use it for the measurement of intangible assets at a minimum. The findings also suggest that the application of fair value accounting increases the uncertainty in fi- nancial statements. The quality of fair value disclosures is very low. Numerous companies do not disclose infor- mation on fair value hierarchy and valuation techniques that were used for fair value measurement. Companies that disclose this information mostly use indirectly ob- servable inputs (Level 2) for fair value measurement and these create a lot of room for earnings management.

scholarly journals Pengaruh Fair Value Accounting Dan Dewan Komisaris Terhadap Earning Management Yang Dimoderasi Oleh Peran Syariah

2020 ◽  
Vol 2 (1) ◽  
pp. 2280-2298
Author(s):  
Restu Hanin Annisa ◽  
Salma Taqwa
Keyword(s):  
Earnings Management ◽  
Sampling Method ◽  
Stock Exchange ◽  
Total Sample ◽  
Fair Value ◽  
Real Earnings Management ◽  
Fair Value Accounting ◽  
Significance Level ◽  
Level Of Significance

The purpose of this study is to determine the effect of fair value accounting and board of commissioners on earnings management. The renewal of this study where the research also aims to determine the role of sharia in moderating the influence of fair value accounting and the board of commissioners on earnings management. Researchers tested banking companies listed on the Indonesia Stock Exchange in 2015-2018 with a total sample of 152 samples using a purposive sampling method. The results showed that fair value accounting and the board of commissioners had no effect on earnings management, where the probability value of both was greater than the level of significance (0.005). In addition, the results of the study stated that the role of sharia can reduce the effect of fair value on earnings management with a significance level of 10% (0.10). However, the role of sharia cannot actually reduce the influence of the board of commissioners on earnings management with a probability level greater than 0.005. Recommendations for further research are expected to be able to trace real earnings management because in this study only using accrual earnings management, then it is expected that the next researcher broadens the sample used and adds other variables that are considered to influence earnings management.

scholarly journals PENGARUH AKUNTANSI NILAI WAJAR TERHADAP MANAJEMEN LABA: PERAN MODERASI STATUS PERUSAHAAN DALAM INDEKS SAHAM SYARIAH INDONESIA

2018 ◽  
Vol 2 (2) ◽  
Author(s):  
Maisya Pratiwi ◽  
Dodik Siswantoro
Keyword(s):  
Earnings Management ◽  
Stock Exchange ◽  
Random Effect ◽  
Financial Sector ◽  
Fair Value ◽  
The Other ◽  
Stock Index ◽  
Earning Management ◽  
Fair Value Accounting ◽  
Positive Effect

ABSTRAK Tujuan dari penelitian ini adalah untuk mengetahui pengaruh nilai wajar (fair value) terhadap manajemen laba. Selain itu, penelitian juga bertujuan untuk mengetahui status perusahaan dalam Indeks Saham Syariah Indonesia (ISSI) dalam memoderasi pengaruh nilai wajar terhadap manajemen laba. Peneliti menguji perusahaan sektor non keuangan yang terdaftar di Bursa Efek Indonesia sebanyak 192 perusahaan selama tahun 2012-2016. Metode analisis data yang digunakan adalah model regresi random effect. Hasil penelitian menunjukkan bahwa nilai wajar tidak berpengaruh signifikan terhadap manajemen laba. Namun ketika nilai wajar dibagi berdasarkan hierarkinya, hasil penelitian menyatakan bahwa hanya nilai wajar 2 dan 3 memiliki pengaruh signifikan terhadap manajemen laba. Selain itu, hasil penelitian menyatakan bahwa perusahaan yang terdaftar dalam Indeks Saham Syariah Indonesia dapat mengurangi pengaruh nilai wajar terhadap manajemen laba, terutama pengaruh nilai wajar hierarki 2 dan 3 terhadap manajemen laba dibandingkan dengan nilai wajar hierarki 1. Kata kunci: Nilai Wajar; Manajemen Laba; Saham Syariah ABSTRACT This study aimed to examine the effect of fair value accounting on earnings management. The study also aimed to determine the companies’ status in Indonesia Sharia Stock Index (ISSI) in moderating the effect of fair value on earnings management. We analysis 192 the non-financial sector companies listed on the Indonesia Stock Exchange from the years of 2012-2016. The result shows that fair value has no significant effect on earnings management. But, when fair value is divided based on fair value hierarchies, the result shows that only hierarchy 2 and 3 fair value has significant effect on earning management. In addition, the other result shows that the companies listed in the Indonesia Sharia Stock Index (ISSI) reduce the positive effect of fair value on earnings management, especially the effect of hierarchy 2 and 3 fair value on earnings management. Keywords: Fair Value; Earning Management; Sharia Stock

scholarly journals Fair value accounting and management opportunism on earnings management in banking sector: First evidence

2018 ◽  
Vol 15 ◽  
pp. 59-69 ◽  
Author(s):  
Marco Tutino ◽  
Marco Pompili
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Banking Sector ◽  
Strong Relationship ◽  
Fair Value ◽  
Financial Instruments ◽  
Fair Value Accounting ◽  
Valuation Process ◽  
Earning Quality ◽  
Short Termism

Accounting standard boards (IASB and FASB) have chosen fair value accounting (FVA) approach to help financial reporting users in the decision-making process. During recent years, an intense debate arose about the trade-off between relevance and reliability of accounting information in this approach. Even if fair value based information could be considered highly relevant and helpful from an investor’s perspective, many authors outline problems related to fair value hierarchy valuation of financial instruments. In particular, the discretionary use of unobservable inputs in financial instruments valuation process can support earnings management strategy underlying the risk for emerging agency problems, moral hazard behaviour and management short-termism. Stating that, after providing a literature review focused on management behaviour related to FVA, the main objective of the paper is identifying possible relationships between FVA valuations and earning quality observing a sample of US and European banks listed in the period 2011-2016 based on Šodan model (Sodan, 2015). Results show a negative and strong relationship between FVA and earning quality for US banks; results for European listed banks do not provide any strong evidence.

Transparency of Fair Value Accounting and Tax

2014 ◽  
pp. 476-494
Author(s):  
Eva Eberhartinger ◽  
Soojin Lee
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Accounting Standards ◽  
Fair Value ◽  
Reporting Standards ◽  
Fair Value Accounting ◽  
Financial Reporting Standards ◽  
Comprehensive Income ◽  
Accounting Measurement ◽  
Other Comprehensive Income

This chapter examines transparency in fair value accounting (measurement, presentation, additional disclosure), with special emphasis on tax disclosure and on the presentation of fair values in the statement of other comprehensive income. After considering the international relevance of the International Financial Reporting Standards, the chapter discusses fair value accounting in the context of accounting standards. It then reviews prior research to determine whether fair value accounting adds to accounting transparency. It also looks at the measurement and presentation of the transparency of fair value accounting based on relevance and reliability, along with issues of earnings management and procyclical effects.

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