(Derivatives Use, Discretionary Accruals, and Firm Value)

2012 ◽  
Author(s):  
Jong Won Park ◽  
Jeong Suk Lee
Keyword(s):  
Firm Value ◽  
Discretionary Accruals

scholarly journals Earnings management, directors’ discretions and information content affecting discretionary accruals of Malaysian publicly listed companies

2014 ◽  
Vol 11 (4) ◽  
pp. 625-634
Author(s):  
Yap Voon Choong ◽  
Kok Thim Chan ◽  
John Stanley Murugeshu
Keyword(s):  
Earnings Management ◽  
Firm Value ◽  
Stock Exchange ◽  
Explanatory Power ◽  
Discretionary Accruals ◽  
Agency Cost ◽  
Share Price ◽  
Future Earnings ◽  
Financial Variables ◽  
Political Costs

Managers have reporting discretion permitted by accounting standards over a combination of earnings management choices. The objective of this study is to identify the types of discretionary accounting choices that are indicative of earnings management. Based on a sample of 947 companies listed on the Malaysian stock exchange, the results indicate that a number of firm specific financial variables that proxy for agency cost, political costs and information asymmetry capture discretionary accruals behaviour. This study also seeks to examine the explanatory power of the earnings management in predicting future earnings and firm value. The results indicate that discretionary accruals can improve the informativeness of a firm’s current and past earnings when predicting future earnings and share price

Can Managers Use Discretionary Accruals to Ease Financial Constraints? Evidence from Discretionary Accruals Prior to Investment

2013 ◽  
Vol 88 (6) ◽  
pp. 2117-2143 ◽  
Author(s):  
James S. Linck ◽  
Jeffry Netter ◽  
Tao Shu
Keyword(s):  
Firm Value ◽  
Discretionary Accruals ◽  
Debt Financing ◽  
Data Availability ◽  
Supporting Evidence ◽  
Improve Performance ◽  
Financial Decisions ◽  
Good Investment ◽  
Investment Opportunities ◽  
Large Panel

ABSTRACT: Despite a large literature on discretionary accruals, how the use of discretionary accruals impacts corporate financial decisions is not well understood. We hypothesize that a financially constrained firm with valuable projects can use discretionary accruals to credibly signal positive prospects, enabling it to raise capital to make the investments. We examine a large panel of firms during 1987 to 2009 and find that financially constrained firms with good investment opportunities have significantly higher discretionary accruals prior to investment compared to their unconstrained counterparts. Constrained high-accrual firms have higher earnings-announcement returns than constrained low-accrual firms, obtain more equity and debt financing, and invest in projects that appear to improve performance. These results provide supporting evidence that the use of discretionary accruals can help constrained firms with valuable projects ease those constraints and increase firm value. Data Availability: Data are available from public sources indicated in the text.

scholarly journals The Economic Effects of Earnings Management Pre- and Post-SOX

2020 ◽  
Author(s):  
Terry W. Mason ◽  
Richard M. Morton
Keyword(s):  
Earnings Management ◽  
Firm Value ◽  
Management Strategies ◽  
Discretionary Accruals ◽  
Economic Effects ◽  
Real Earnings Management ◽  
High Profile ◽  
Accounting Scandals ◽  
Financial Oversight

Research suggests that following several high-profile accounting scandals and the passage of SOX legislation in 2002, firms substituted real earnings management strategies for accrual manipulation. However, the broader implications of this trade-off from a public policy and financial oversight perspective are not well understood. Consistent with our expectations, we find that abnormal operating decisions are less informative about future ROA in the post-SOX period. We also find that the increase in real earnings management negatively impacts firm value, but investors appear slow to recognize and price the myopic behavior. We do not observe a corresponding increase in the quality of discretionary accruals after SOX, but market mispricing of abnormal accruals essentially disappears, consistent with greater investor scrutiny. Although the shift away from accrual manipulation to real earnings management should result in less distortion of underlying economic events, the net effect appears to be value destroying for the average firm.

scholarly journals KUALITAS AUDIT SEBAGAI PEMODERASI PENGARUH MANAJEMEN LABA TERHADAP NILAI PERUSAHAAN

2020 ◽  
Vol 3 (2) ◽  
pp. 174-190
Author(s):  
I Putu Edi Darmawan
Keyword(s):  
Earnings Management ◽  
Firm Value ◽  
Audit Quality ◽  
Stock Exchange ◽  
Sampling Technique ◽  
Discretionary Accruals ◽  
Real Earnings Management ◽  
Manufacturing Companies ◽  
Negative Effect ◽  
The Impact

This study aims to test and analyze the impact of accrual earnings management and real earnings management on firm value empirically. Also, audit quality's role on the effect of accrual earnings management and total earnings management on firm value. The analytical method used is Moderated Regression Analysis (MRA). This research's population is manufacturing companies listed on the Indonesia Stock Exchange during the period 2013 to 2017. The sampling technique used is purposive sampling. This study found that accrual earnings management, which is proxied by discretionary accruals, positively affects firm value. Real earnings management has a negative effect on firm value. Audit quality cannot weaken the effect of accrual earnings management on firm value. However, audit quality weakens the effect of real earnings management on firm value.

scholarly journals MANAJEMEN LABA, TATA KELOLA DAN NILAI PERUSAHAAN

2021 ◽  
Vol 23 (1) ◽  
pp. 133-144
Author(s):  
SHEVIN WINARTA ◽  
IRENE NATALIA ◽  
DEDHY SULISTIAWAN
Keyword(s):  
Corporate Governance ◽  
Earnings Management ◽  
Firm Value ◽  
Stock Exchange ◽  
Institutional Ownership ◽  
Discretionary Accruals ◽  
Managerial Ownership ◽  
Accounting Research ◽  
Governance Practices ◽  
Positive Effect

The purpose of this study is to empirically determine the effect of earnings management and corporate governance practices on firm value. Modified Jones-based discretionary accruals are used as a proxy for earnings management. Firm value is measured by Tobin's Q and corporate governance is evaluated by independent commissioners, managerial ownership, institutional ownership, and auditor reputation. The study uses companies listed in Indonesia Stock Exchange for the 2017-2019 period. The main findings indicate that earnings management has a positive effect on firm value and institutional ownership is able to weaken the effect of earnings management on firm value. This study contributes to market-based accounting research and corporate governance.

scholarly journals THE EFFECT OF FIRM VALUE AND FINANCIAL PERFORMANCE ON EARNINGS MANAGEMENT IN SHARIA ISSUERS: EVIDENCE FROM THE INDONESIA STOCK EXCHANGE

2020 ◽  
Vol 3 (1) ◽  
pp. 13-22
Author(s):  
Ade Imam Muslim
Keyword(s):  
Earnings Management ◽  
Financial Performance ◽  
Strong Evidence ◽  
Firm Value ◽  
Management Practices ◽  
Stock Exchange ◽  
Discretionary Accruals ◽  
Earning Management ◽  
Tobin's Q ◽  
Accounting Research

Earnings management is still an interesting focus of research from year to year. Research does not only focus on conventionally based entities but also moves to Sharia entities. This study aims to investigate the effect of firm value and financial performance on earning management. From the 20 sharia issuers that were successfully analyzed as samples, we found that, in general, there is no strong evidence that Islamic issuers practice earnings management, this can be seen from the positive average discretionary accruals. Referring to the discussion of the influence of firm value as measured by Tobin’s Q on the practice of earnings management, it was concluded that firm value had a significant effect on earnings management practices. This research has two contributions. Firstly this research is expected to contribute to market-based accounting research. Secondly, this study provides evidence of earnings management practices for Islamic entities.

The Effect of the Determinants of Accounting Discretion on the Relationship Between Earnings Management and Stock Returns

2019 ◽  
Vol 9 (2) ◽  
pp. 391
Author(s):  
Sondes Draief
Keyword(s):  
Earnings Management ◽  
Stock Returns ◽  
Private Information ◽  
Firm Value ◽  
Financial Risk ◽  
Discretionary Accruals ◽  
Growth Options ◽  
Future Prospects ◽  
Distressed Firms ◽  
The Relationship

This research investigates the effect of the determinants of accounting discretion (beating last year’s earnings, overinvestment problems, growth options, debt, and financial risk) on the relationship between earnings management and stock returns. We use discretionary accruals as a proxy of earnings management.Based on a sample of 486 American firms for the period 2002-2010, our results show that discretionary accruals are positively priced by the market. This relation is even stronger when firms beat last year’s earnings, have higher growth options and increase their debt ratio. Indeed, firms’ accounting manipulations are used, in these circumstances, to convey private information about future prospects and signal good financial situation to external investors. However, discretionary accruals are negatively priced by investors in distressed firms and when overinvestment problems are intense. These firms have greater motivation to use opportunistic earnings management to camouflage the fall of firm value.

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