Earnings Management and Performance of Indian Equity Rights Issues

2008 ◽  
Author(s):  
Narayan Rao Sapar
Keyword(s):  
Earnings Management ◽  
And Performance ◽  
Rights Issues

Earnings Management and Capital Resource Allocation: Evidence from China's Accounting-Based Regulation of Rights Issues

2004 ◽  
Vol 79 (3) ◽  
pp. 645-665 ◽  
Author(s):  
Kevin C. W. Chen ◽  
Hongqi Yuan
Keyword(s):  
Resource Allocation ◽  
Earnings Management ◽  
Listed Companies ◽  
Return On Equity ◽  
Rights Issue ◽  
Rights Issues ◽  
Over Time ◽  
Do So

From 1996 to 1998, listed companies in China were required to achieve a minimum return on equity (ROE) of 10 percent in each of the previous three years before they could apply for permission to issue additional shares. As a result of this rule, there was a heavy concentration of ROEs in the area just above 10 percent. We show that the Chinese regulators appear to have scrutinized firms using excess amounts of nonoperating income to reach the 10 percent hurdle. In addition, their ability to do so seems to have improved over time, which allows them to be better able to identify firms that subsequently performed better. However, many firms were still able to gain rights issue approval through excess nonoperating income. We show that these firms subsequently underperformed other approved firms that did not use the same practice, indicating that the Chinese regulators' objective of guiding capital resources toward the well-performing sectors is partially compromised by earnings management.

scholarly journals EARNINGS MANAGEMENT ANALYSIS ON SERVICE INDUSTRIES THAT SUPPORT TOURISM SECTOR AFTER THE EARTHQUAKE OF LOMBOK AND PALU

2020 ◽  
Vol 19 (1) ◽  
pp. 109-121
Author(s):  
Nina Karina Karim ◽  
Siti Atikah ◽  
Indria Puspitasari Lenap
Keyword(s):  
Earnings Management ◽  
Natural Disaster ◽  
Management Practices ◽  
Service Industries ◽  
Financial Accounting ◽  
Financial Statement ◽  
Service Companies ◽  
Tourism Sector ◽  
And Performance ◽  
A Company

Earnings management practices in corporate financial statement continues to be an issue of debate in the financial accounting realm. Earnings management is done by the management of a company for various reasons. Information disclosed in the financial statement ideally must reflect the condition and performance of a company. Extraordinary events such as natural disaster surely will affect the performance of a company that is impacted by the event. A decline in corporate financial performance will affect the corporate stakeholders. This research aims to detect earnings management practices that might be conducted by service companies that support tourism industries affected by the earthquake that occurred in Lombok and Palu. Using the equation formulated by Stubben (2009) to detect earnings management practices by observing the change in discretionary revenues, this research has found that the natural disaster that hit Lombok and Palu was not a powerful enough extraordinary event that might have driven the management to conduct earnings management practices.

scholarly journals Effect of Earnings Management on Firm Value with Corporate Governance as a Moderating Variable

2021 ◽  
Vol 9 (2) ◽  
pp. 262-268
Author(s):  
Jevri Afrizal ◽  
Rindu Rika Gamayuni ◽  
Usep Syaipudin
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Firm Value ◽  
Management Practices ◽  
Governance System ◽  
Corporate Governance System ◽  
And Performance ◽  
Conceptual Study ◽  
Positive Effect

This study aims to provide a conceptual study of the effect of earnings management on firm value by including corporate governance. as a moderating variable. This paper is a conceptual paper that discusses issues related to earnings management on firm value and the role of corporate governance in minimizing earnings management practices so as to increase firm value. Previous theoretical studies have shown that earnings management is effectively controlled by the corporate governance system and performance. In addition, the results of previous studies found empirical evidence that there is a positive relationship between earnings management and firm value. From the theoretical discussion and previous research, it is concluded that earnings management practices have a positive effect on firm value as moderated by corporate governance.

scholarly journals THE EFFECT OF GOVERNANCE ON THE COMPANIES PERFORMANCE IN JORDAN

2020 ◽  
Vol 3 (Special Issue) ◽  
Keyword(s):  
Earnings Management ◽  
Empirical Evidence ◽  
Strong Correlation ◽  
Strong Relationship ◽  
Financial Information ◽  
Audit Committees ◽  
Governance Mechanisms ◽  
Financial Reports ◽  
Important Impact ◽  
And Performance

This study examines the effects of the correlation between governance on the performance in the Jordanian companies, the sample comprises of 85 companies, 600 observations, listed in ASE for the period from (2008-2015), thus our goal is the correlation between the governance mechanisms and performance. The results of this research expose a strong correlation both the governance mechanisms and performance, and the results of this study have significant that supports encouraging the enforcement of the principles of governance and controlling the behavior of these committees, the reliability of data, financial information, and reports issued by companies can be enhanced. The results of the current study show that there is an important and strong relationship between governance and its mechanisms, as it showed that the independence of the audit committees and their experience have a positive and important impact on the performance and thus have an impact on the earnings and their quality and the financial reports of the Jordanian companies and the mitigation of earnings management. This study bridges the literature gap by providing empirical evidence on the efficiency of governance in Jordan and its impact on performance. Consequently, this study has a strong contribution to knowledge about governance, its mechanisms, earnings management, and assistance to specialists in making decisions.

The Effects of Firm Growth and Model Specification Choices on Tests of Earnings Management in Quarterly Settings

2016 ◽  
Vol 92 (2) ◽  
pp. 69-100 ◽  
Author(s):  
Daniel W. Collins ◽  
Raunaq S. Pungaliya ◽  
Anand M. Vijh
Keyword(s):  
Earnings Management ◽  
Firm Growth ◽  
Type I Error ◽  
Error Rates ◽  
Model Specification ◽  
Type I ◽  
Discretionary Accrual ◽  
Non Linear ◽  
Performance Effects ◽  
And Performance

ABSTRACT Commonly used Jones-type discretionary accrual models applied in quarterly settings do not adequately control for nondiscretionary accruals that naturally occur due to firm growth. We show that the relation between quarterly accruals and backward-looking sales growth (measured over a rolling four-quarter window) and forward-looking firm growth (market-to-book ratio) is non-linear. Failure to control for the effects of firm growth and performance on innate accruals leads to excessive Type I error rates in tests of earnings management. We propose simple refinements to Jones-type models that deal with non-linear growth and performance effects and show that the expanded models are well-specified and exhibit high power in quarterly settings where one is testing for earnings management. The expanded models are able to identify the presence of earnings management in a sample of restatement firms. Our findings have important implications for the use of discretionary accrual models in earnings management research. JEL Classifications: C15; M40; M41.

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