R&D Expenditure Volatility and Stock Return: Earnings Management, Adjustment Costs or Overinvestment?

2014 ◽  
Author(s):  
Grant Stewart Cullen ◽  
Dominic Gasbarro ◽  
Wenjuan Ruan ◽  
Erwei Xiang
Keyword(s):  
Earnings Management ◽  
Stock Return ◽  
Adjustment Costs ◽  
Expenditure Volatility

Relationship between earnings management, CEO compensation, and stock return on Tehran Stock Exchange

2019 ◽  
Vol 23 (1) ◽  
pp. 1-22
Author(s):  
Mahdi Moardi ◽  
Mahdi Salehi ◽  
Simin Poursasan ◽  
Homa Molavi
Keyword(s):  
Earnings Management ◽  
Cash Flow ◽  
Significant Relationship ◽  
Stock Return ◽  
Stock Exchange ◽  
Discretionary Accruals ◽  
Content Type ◽  
Future Cash Flow ◽  
Accruals Quality ◽  
The Relationship

Purpose The purpose of this paper is to investigate the relationship between earnings management and chief executive officers’ (CEOs) compensation. Owing to the fact that earnings management does not have only opportunistic effects, but signaling effects, this study focuses on accruals quality to examine earnings management incentives. Thus, accruals quality is described against future cash flow. The empirical evidences suggest that a positive relationship between discretionary accruals and future cash flow provides predictive elements for earnings management, whereas a negative relationship between discretionary accruals and future cash implies to opportunistic elements for earnings management. Should there is no significant relationship between discretionary accruals and future cash flow, there will be no earnings management, and such a result suggests that incentives and managers’ performance in these firms differ. Design/methodology/approach The statistical population of this research consists of all listed companies on the Tehran Stock Exchange during 2009–2016. Panel data method is applied in order to estimate the research model. Findings Findings of the study show that there is no significant relationship between discretionary accruals and future cash flow in pharmaceutical and food industries, thus they have neither predictive nor opportunist earnings management, while the results evidence a negative significant relationship between discretionary accruals and future cash flow in machineries, automobile, mineral and chemical industries. Furthermore, it can be alleged that there is no significant difference between CEOs’ compensation in firms with opportunistic earnings management (OEM) and other types of earnings management. It shows that firms do not have appropriate plans for CEOs’ compensation. Moreover, the relationship between earnings management and stock return has been investigated in this study. We document that stock return is influenced by accruals quality and its components. In other words, stock return significantly differs in firms with OEM and firms without any kind of earnings management. Research limitations/implications The authors’ findings provide contributions; for managers, it is noticeable that stock markets have sufficient comprehension about financial statements and the undertaken procedures on them, resulting in a higher return base on fair information. For investors and regulators, using the findings, may have deeper understanding to distinguish between industries that are recognized as opportunistic and non-opportunistic, which, in turn, results in better decision and regulation. Originality/value Previous studies have been mostly investigated OEM, while the current study examines both signaling and opportunistic aspects of earnings management.

scholarly journals The Effect of Earnings Management to Stock Return on Company Listed in Indonesia

2021 ◽  
Vol 8 (2) ◽  
pp. 194-201
Author(s):  
Sukiantono Tang ◽  
Wini Alvita
Keyword(s):  
Data Collection ◽  
Earnings Management ◽  
Stock Returns ◽  
Stock Return ◽  
Management Practices ◽  
Descriptive Statistics ◽  
Accurate Information ◽  
Financial Report ◽  
Purposive Sampling

The financial report should report accurate information about the company situation so it can be utilized properly by stakeholders. This study aims to examine the effect of earnings management on stock returns. The data collection of this study used purposive sampling. A total of 1335 data were collected and used as research samples. The data that has been collected is then tested to obtain the results. Furthermore, in analyzing the data, the method used is descriptive statistics. Based on the analysis, the results of this study showed that earnings management has a significant effect on the stock return variable. This is because earnings management practices can trick investors into making investment transactions.

Earnings Management and Investor's Stock Return

2012 ◽  
Vol 48 (sup3) ◽  
pp. 129-140 ◽  
Author(s):  
Shih-Wei Wu ◽  
Fengyi Lin ◽  
Wenchang Fang
Keyword(s):  
Earnings Management ◽  
Stock Return

scholarly journals MANAJEMEN LABA, RETURN SAHAM, DAN KINERJA OPERASI SEBAGAI PEMODERASI

2017 ◽  
Vol 15 (2) ◽  
pp. 133
Author(s):  
Farid Addy Sumantri ◽  
Purnamawati .
Keyword(s):  
Earnings Management ◽  
Stock Returns ◽  
Initial Public Offering ◽  
Stock Return ◽  
Operating Performance ◽  
Abnormal Returns ◽  
Return On Assets ◽  
One Year ◽  
Public Offering ◽  
The Relationship

<p><em>The purpose of this study was to determine the indications of the practice of earnings management at the time of the IPO, one year after the IPO, and two years after the IPO. This study also examined the effect of earnings management on stock returns and operating performance in moderating the relationship between earnings management and stock returns.</em></p><p><em>The study sample comprised 33 firms that go public in the year 2007 to 2011 using a purposive sampling method. Earnings management is proxied by discretionary accruals using the Modified Jones Model, which used proxy for the stock return is cummulative abnormal returns (CAR), while for the company's operating performance used proxy for the return on assets (ROA).</em></p><p><em>The results showed that there were indications of earnings management at the time of the IPO, one year after the IPO, and two years after the IPO with a lower profit rate. No effect on earnings management is proxied by stock return cummulative abnormal returns (CAR). Operating performance of the company also can not moderate the relationship between earnings management with stock return.</em></p><p><em> </em></p><p><em>Keywords: Earning Management, Initial Public Offering, Cummulative Abnormal Return, </em><em>Return On Asset</em></p>

scholarly journals Impact of Earnings Management Practices on Stock Return

2021 ◽  
Vol 13 (1) ◽  
Author(s):  
Sahar Kanwal ◽  
Niaz Ahmed Bhutto ◽  
Muhammad Shaique ◽  
Anjlee Matlani ◽  
Hafsa Zahid
Keyword(s):  
Earnings Management ◽  
Stock Return ◽  
Management Practices

Impact of upward and downward earnings management on stock returns

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Asgar Ali ◽  
Manish Bansal
Keyword(s):  
Earnings Management ◽  
Stock Returns ◽  
Stock Return ◽  
Momentum Effect ◽  
Cross Sectional ◽  
Content Type ◽  
Uniform Sample ◽  
The Impact ◽  
Moderating Role

PurposeThe current study aims at examining the impact of upward and downward earnings management on the cross-sections of stock return. The study also examines the moderating role of cross-sectional effects on the association between earnings management and stock returns.Design/methodology/approachThe study employed univariate and bivariate-sorted portfolio-level analysis to investigate the issue. Fama–Macbeth cross-sectional regression is used to analyze the moderating role of different cross-sectional effects. The study used a sample of 3085 Bombay Stock Exchange (BSE) listed stocks spanning over 20 years from January 2000 to December 2019.FindingsThe findings suggest that investors have different perceptions toward different forms of earnings management. In other words, results exhibit that investors perceive downward earnings management as an element of risk; hence, they discount the returns at a higher rate. On the contrary, results show that upward earnings management is positively perceived by the investors; hence, they hold the stocks even at a lower rate of return. This relation is found to be consistent even after controlling the impact of marker effect, size effect, value effect and momentum effect.Originality/valueThis study is among pioneering studies that consider the direction of earnings management while examining its impact on the stock return. This study is also among the earlier attempts to examine the moderating role of four different cross-sectional effects by taking a uniform sample of stocks over the same period.

scholarly journals The effect of financial distress using the Altman and Springate Models on stock return in mediated earnings management

2021 ◽  
Vol 10 (5) ◽  
pp. 119-128
Author(s):  
Faradisa Bachmid ◽  
Sumiati Sumiati ◽  
Siti Aisjah
Keyword(s):  
Earnings Management ◽  
Stock Returns ◽  
Financial Distress ◽  
Stock Return ◽  
Stock Exchange ◽  
Secondary Data ◽  
Financial Statements ◽  
Analysis Technique ◽  
Negative Effect ◽  
Positive Effect

This study aims to examine and analyze the effect of financial distress with the Altman and Springate Models on stock returns either directly or indirectly by involving earnings management as a mediation. This study uses secondary data from Textile and Garment Companies listed on the Indonesia Stock Exchange from 2015-2019, with a sample of 20 companies using sampling so that 100 observations are obtained. The data is obtained from the annual financial statements. The data analysis technique used SEM-PLS with the help of WarpPLS 6.0 software. The results of the study provide empirical evidence that financial distress has a positive effect on earnings management, while financial distress and earnings management has a negative effect on stock returns. Earnings management is able to mediate the effect of financial distress on stock returns.

scholarly journals MANAJEMEN LABA, RETURN SAHAM, DAN KINERJA OPERASI SEBAGAI PEMODERASI

2017 ◽  
Vol 13 (2) ◽  
pp. 61 ◽  
Author(s):  
Farid Addy Sumantri ◽  
Purnamawati ,
Keyword(s):  
Earnings Management ◽  
Stock Returns ◽  
Initial Public Offering ◽  
Stock Return ◽  
Operating Performance ◽  
Abnormal Returns ◽  
Return On Assets ◽  
One Year ◽  
Public Offering ◽  
The Relationship

<p>The purpose of this study was to determine the indications of the practice of earnings<br />management at the time of the IPO, one year after the IPO, and two years after the<br />IPO. This study also examined the effect of earnings management on stock returns<br />and operating performance in moderating the relationship between earnings<br />management and stock returns.<br />The study sample comprised 33 firms that go public in the year 2007 to 2011 using<br />a purposive sampling method. Earnings management is proxied by discretionary<br />accruals using the Modified Jones Model, which used proxy for the stock return is<br />cummulative abnormal returns (CAR), while for the company’s operating<br />performance used proxy for the return on assets (ROA).<br />The results showed that there were indications of earnings management at the time<br />of the IPO, one year after the IPO, and two years after the IPO with a lower profit<br />rate. No effect on earnings management is proxied by stock return cummulative<br />abnormal returns (CAR). Operating performance of the company also can not<br />moderate the relationship between earnings management with stock return.<br />Keywords: Earning Management, Initial Public Offering, Cummulative Abnormal<br />Return, Return On Asset</p>

scholarly journals GOOD CORPORATE GOVERNANCE, CONSERVATISM ACCOUNTING, REAL EARNINGS MANAGEMENT, AND INFORMATION ASYMMETRY ON SHARE RETURN

2019 ◽  
Vol 4 (1) ◽  
pp. 9-18
Author(s):  
Sugiyanto Sugiyanto ◽  
Alexander Candra
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Information Asymmetry ◽  
Stock Returns ◽  
Stock Return ◽  
Real Earnings Management ◽  
Manufacturing Companies ◽  
Significant Negative Effect ◽  
Good Corporate Governance ◽  
Negative Effect

This study aims to analyze the influence of accounting conservatism, real earnings management, and information asymmetry on stock returns. This study uses the sample of all manufacturing companies listed on the Indonesia Stock Exchange during the period 2013 to 2015. The total number of companies used as sample research is 44 companies with observations for three years. Pursuant to purposive sampling method, total of research sample is 132 financial reports and annual reports. The results of this study indicate: (1) Good corporate governance has a significant negative effect on stock return with a significance value of 0.002<0.050; (2) Conservatism with accrual-based conservatism proxy has a significant negative effect on stock return with a significance value of 0.032 <0.050; (3) Real earnings management with the proxy of discretionary cash flow has no effect on stock return with a significance value of 0.050; and (4) Information asymmetry with proxy of bid-ask spread has no effect on stock return with significance value of 0.453> 0.05.

Sign in / Sign up

Export Citation Format

Share Document