On the Association between Voluntary Disclosure and Earnings Management

1999 ◽  
Vol 37 (1) ◽  
pp. 57 ◽  
Author(s):  
Ron Kasznik
Keyword(s):  
Earnings Management ◽  
Voluntary Disclosure

The extent of voluntary corporate disclosure in the Egyptian Stock Exchange

2017 ◽  
Vol 7 (2) ◽  
pp. 266-291 ◽  
Author(s):  
Hany Kamel ◽  
Emad Awadallah
Keyword(s):  
Earnings Management ◽  
Voluntary Disclosure ◽  
Management Practices ◽  
Developing Economies ◽  
Stock Exchange ◽  
Related Factor ◽  
Corporate Disclosure ◽  
Content Type ◽  
The Relationship ◽  
Egyptian Stock Exchange

Purpose The purpose of this paper is to investigate the current level of voluntary corporate disclosure in the Egyptian Stock Exchange. In addition, it explores the factors influencing the extensiveness of voluntary disclosure and examines the potential consequences of such disclosure in regards to the phenomenon of earnings management. Design/methodology/approach A relevant disclosure index to the Egyptian context was adopted to assess the level of voluntary disclosure in the 2010 annual reports of the most actively traded companies listed on the Egyptian Stock Exchange. The relationship between the extent of voluntary disclosure and each specific-related factor was examined using unranked and ranked OLS regression models. Meanwhile, a system of simultaneous equations was performed using a two-stage least squares regression model in order to investigate whether companies with higher levels of voluntary disclosure exhibit lower levels of earnings management practices. Findings The results indicate that the level of voluntary disclosure is positively responsive to specific corporate attributes, namely, the type of auditing firm and the two industries of Healthcare and Pharmaceuticals, and Chemicals. However, no significant indications were found that firm size, leverage, profitability and liquidity are important determinants of corporate disclosure. Also, the results show no evidence to support the prior anticipation that a higher level of voluntary disclosure reduces the ability of managers to make use of earnings management. On the contrary, it was found that leverage and the tendency of firms to avoid reporting declines in earnings are the main drivers of the phenomenon of earnings management in Egypt. Practical implications This paper has important implications for both domestic and overseas investors in Egypt as well as the regulatory authorities in the developing economies. Originality/value The main contribution of this paper is its focus on the extent of voluntary disclosure in a developing country such as Egypt, which has a high potential for economic growth in the near future. Besides, this paper is the first to examine the relationship between the level of voluntary disclosure and the phenomenon of earnings management in the Egyptian context.

A review of the influence of political connections on management’s decision in non-US settings

2020 ◽  
Vol 18 (4) ◽  
pp. 687-705
Author(s):  
Ines Amara ◽  
Hichem Khlif
Keyword(s):  
Earnings Management ◽  
Voluntary Disclosure ◽  
Management Practices ◽  
Empirical Studies ◽  
Tax Avoidance ◽  
Economic Effects ◽  
Real Earnings Management ◽  
Political Connections ◽  
Future Research ◽  
Content Type

Purpose Given the interest in better understanding the economic effects of political connections, this paper aims to review empirical studies in the accounting and finance domain investigating the effects of firms’ political connections on management’s decision in non-US settings. Design/methodology/approach Key words used to search for relevant studies include “political connections” linked with “tax avoidance,” “earnings quality” “voluntary disclosure.” The authors consult several editorial sources including Elsevier, Electronic Journals Service EBSCO, Emerald, Springer, Palgrave Macmillan, Sage, Taylor & Francis and Wiley-Blackwell. The authors’ search yields 46 published studies since 2006. Findings The review reveals a prevalence of studies conducted in Asia. A narrative synthesis of empirical findings shows mixed effects of political connections on earnings management, as measured by accrual-based or real earnings management practices. Mixed evidence also exists for the association between political connections and reporting policy (e.g. corporate social responsibility reporting). The review also reveals that firms with political ties adopt an aggressive tax policy aimed at reducing effective tax rates and are more likely to choose a Big 4 auditor. Originality/value The review discusses the political connections literature focusing on studies outside of the USA and the effect of such connections on decision-making by management. It identifies some limitations of this literature and offers guidance for future research avenues. The synthesis suggests that political connections can adversely or beneficially impact management’s decisions depending on the legal, institutional and cultural characteristics prevailing in a particular setting.

scholarly journals PENGARUH MANAJEMEN LABA, ASIMETRI INFORMASI, DAN PENGUNGKAPAN SUKARELA TERHADAP BIAYA MODAL EKUITAS

Paradigma ◽  
2020 ◽  
Vol 17 (2) ◽  
pp. 69-88
Author(s):  
Dian Desty Widyowati
Keyword(s):  
Earnings Management ◽  
Information Asymmetry ◽  
Voluntary Disclosure ◽  
Sampling Technique ◽  
Equity Capital ◽  
Cost Of Equity Capital ◽  
Cost Of Equity ◽  
Independent Variables ◽  
The Cost ◽  
Positive Effect

The research method used multiple regression analysis. The data used are the annual financial statements of property companies listed on the Indonesia Stock Exchange 2014-2016. The sample is 87 companies with purposive sampling technique. The data is processed using SPSS (Statistical Product and Service Solution) Version 22. The results of this study indicate that earnings management has a positive effect on the cost of equity capital with a significant level of 0.000 and beta 0.712, information asymmetry has a significant effect on the cost of equity capital with a significant level of 0.087 and beta 0.139. , then voluntary disclosure has no significant effect on the cost of equity capital with a significant level of 0.955 and beta 0.004. In general, it can be concluded that earnings management has a positive effect on the cost of equity capital, while information asymmetry and voluntary disclosure have no significant effect on the cost of equity capital. Future studies consider adding other independent variables that can affect the cost of equity capital so that it can show a better correlation between the dependent and independent variables.

scholarly journals The Effect of Corporate Social Responsibility on Earnings Management: Bibliometric Review

2021 ◽  
Vol 9 (4) ◽  
pp. 68
Author(s):  
José Manuel Santos-Jaén ◽  
Ana León-Gómez ◽  
José Serrano-Madrid
Keyword(s):  
Corporate Social Responsibility ◽  
Social Responsibility ◽  
Earnings Management ◽  
Voluntary Disclosure ◽  
Audit Committee ◽  
Gender Diversity ◽  
The World ◽  
Bibliometric Review ◽  
Corporate Social ◽  
The Impact

This review aims to study the knowledge development and research dissemination on the influence of Corporate Social Responsibility (CSR) on earnings management through a social network approach using a bibliometric review. A systematic bibliometric review was carried out on 329 papers obtained from the Clarivate Analytics Web of Science (WoS) Core Collection database. The data were analyzed by year, journal, author, institution, country, affiliation, subject area and term analysis. The results reveal the growing interest of researchers in studying the impact of CSR. Although the USA and China dominate publication production, there are a large number of authors from more than 50 countries around the world. The results also show that being prolific does not imply being influential in this area. The keyword patterns showed some interesting potential areas of study on this topic. The findings of this paper provide insight to the research on the analysis of the influence of CSR on earnings management. The most important findings consist of a number of gaps in the literature, such as gender diversity, voluntary disclosure of information and existence of an audit committee, among others, that allow for future fields of research to improve the analysis of the influence of CSR in EM. This research should also prove helpful to managers, owners and auditors. This is the first bibliometric review developed on this topic and it can be extrapolated to any place in the world.

Voluntary disclosure and complexity of reporting in Egypt: the roles of profitability and earnings management

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Mai Mohammed Alm El-Din ◽  
Atef Mohammed El-Awam ◽  
Farid Moharram Ibrahim ◽  
Ahmed Hassanein
Keyword(s):  
Earnings Management ◽  
Voluntary Disclosure ◽  
Management Practices ◽  
Annual Report ◽  
Management Practice ◽  
Poor Performance ◽  
Annual Reports ◽  
Content Type ◽  
Nonfinancial Firms ◽  
The Relationship

PurposeThe study explores the relationship between information overloading and the complexity of reporting. In particular, it investigates whether voluntary information in a firm annual report is associated with its readability. Likewise, it examines how a firm's profitability and earnings management practices impact the nexus of voluntary disclosure and readability.Design/methodology/approachIt uses the annual reports of the Egyptian nonfinancial firms listed in the EGX 100 index from 2010 to 2018. The readability of the annual report is measured automatically using the LIX index, and a predeveloped voluntary disclosure index is used to measure the level of voluntary disclosure in the annual reports.FindingsThe results reveal that the readability of annual reports is a negative function of voluntary disclosure, suggesting that Egyptian firms with more voluntary disclosure are likely to have more complex (i.e. less readable) annual reports. Likewise, less profitable firms and firms with earning management practices increase voluntary information in their annual reports, resulting in an adverse impact on their reporting readability.Research limitations/implicationsIt focuses only on the annual reports of Egyptian firms and considers a firm’s overall voluntary information rather than a particular area of voluntary disclosure. It introduces a code to measure the readability of Arabic-written texts, which can be applied to different areas of disclosure.Practical implicationsPolicymakers in Egypt are encouraged to develop enforceable regulations to control voluntary disclosure in annual reports. Egyptian investors should view the practice of higher voluntary disclosure skeptically as its aim may be to divert attention from a firm's poor performance and earnings management practice.Originality/valueThe study is the first evidence from Egypt on the effect of information overloading, proxied by voluntary disclosure, on the readability of reporting. Likewise, it contributes to methodological development in measuring the readability of Arabic-written annual reports.

scholarly journals Voluntary disclosure and earnings management: evidence from the Brazilian capital market

2017 ◽  
Vol 28 (74) ◽  
pp. 249-263 ◽  
Author(s):  
Silvia Consoni ◽  
Romualdo Douglas Colauto ◽  
Gerlando Augusto Sampaio Franco de Lima
Keyword(s):  
Earnings Management ◽  
Voluntary Disclosure ◽  
A Priori ◽  
Negative Relationship ◽  
Market Demand ◽  
Potential Market ◽  
Significant Negative Relationship ◽  
Theoretical Assumptions ◽  
The Subject ◽  
The Relationship

ABSTRACT This study examines the association between the voluntary disclosure of economic and financial information and earnings management. The outlined arguments on the subject are based on the assumption that consistent voluntary disclosure policies may reduce earnings management. The analysis is conducted on a random sample of 66 non-financial Brazilian listed companies in the 2005-2012 period. To measure voluntary disclosure, the index proposed by Consoni and Colauto (2016) is used. As a proxy for earnings management, discretionary accruals (DA) are estimated based on the model by Dechow, Sloan, and Sweeney (1995). The relationship between these measurements is analyzed using a model of simultaneous equations and by the random effects regression method with panel data. A significant negative relationship was expected a priori; however, the main result of the study indicates that voluntary disclosure and earnings management are not simultaneously determined or associated. Although the results obtained contradict certain theoretical assumptions, there are alternative explanations for this finding. The empirical set of evidence in this research, in addition to those in previous studies, should be interpreted with caution because there is no consensus on the measures for voluntary disclosure and earnings management. Second, several companies in Brazil may not be interested in providing high-quality voluntary disclosure because most of their shareholders enjoy private benefits of control. This issue reduces the importance of the potential market demand for information, stratifies information asymmetry, and does not prevent earnings management.

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