scholarly journals Impact of firm-level uncertainty on earnings management and role of accounting conservatism

2019 ◽  
Vol 3 (4) ◽  
pp. 772-794 ◽  
Author(s):  
Abdul Haque ◽  
◽  
Huma Fatima ◽  
Ammar Abid ◽  
Muhammad Ali Jibran Qamar ◽  
...  
Keyword(s):  
Earnings Management ◽  
Accounting Conservatism ◽  
Firm Level

Political stability, political rights and earnings management: some international evidence

2019 ◽  
Vol 33 (1) ◽  
pp. 57-74 ◽  
Author(s):  
Tesfaye Taddese Lemma ◽  
Ayalew Lulseged ◽  
Mthokozisi Mlilo ◽  
Minga Negash
Keyword(s):  
Earnings Management ◽  
Political Stability ◽  
Real Earnings Management ◽  
Political Rights ◽  
Firm Level ◽  
Content Type ◽  
Financial Firms ◽  
Political Forces ◽  
The Impact

Purpose This study aims to examine the impact of political stability and political rights on firm-level earnings (both accrual-based and real) management. Design/methodology/approach The authors develop models that link political stability, political rights, and the interplay between the two and earnings (both accrual-based and real) management. The authors analyze 63,872 firm-year observations of publicly listed, non-financial, firms drawn from 39 countries, for the period 1995 to 2016. Findings The authors find that political stability (political rights) attenuates (accentuates) accrual-based earnings management; political rights (political stability) accentuates (have no effect on) real earnings management; and the association between political rights and real earnings management is more pronounced in countries with better political stability. Practical implications The findings imply that users of financial statements should take cognizance of a country’s ambient political environment in assessing the potential for earnings management by firms. Originality/value No prior research examined the role of political forces in shaping firm-level earnings management behavior in a cross-country setting.

scholarly journals Earning Management and the Role of Accounting Conservatism at Firm Level

2016 ◽  
Vol 8 (2) ◽  
pp. 197 ◽  
Author(s):  
Abdul Haque ◽  
Azhar Mughal ◽  
Zohaib Zahid
Keyword(s):  
Financial Reporting ◽  
Research Study ◽  
Accounting Conservatism ◽  
Earning Management ◽  
Firm Level ◽  
Conservative Group ◽  
Reporting Practices ◽  
High Earning ◽  
The Relationship

<p>Accounting conservatism and earning management are very much pervasive in financial reporting practices. Therefore, this research study aims to investigate the relationship between accounting conservatism and earning management by using a sample of 317 non-financial Pakistani firms consisting of 4204 firm-years over the period 1999-2013. Conservatism at the firm level is estimated by using the C-Score measure and earning management is observed by calculating discretionary accruals. The estimated results show that one fourth (86 firms) of the sample is highly conservative; out of these 76% (65 firms) showed least earning management (Earning management&lt;Q<sub>1</sub>) while 24% (21 firms) showed moderate earning management (Q<sub>1</sub>&lt;Earning management&lt;Q<sub>3</sub>). On the other hand, in the least conservative group, 71% (57 firms) showed high earning management (Earning management &gt; Q<sub>3</sub>) and 29% (23 firms) showed earning management at a moderate level (Q<sub>1</sub>&lt;Earning management&lt;Q<sub>3</sub>). Thus the findings of the study reveal a negative association between accounting conservatism and earning management.</p>

scholarly journals The role of institutional shareholders in the relationship between unconditional conservatism and earnings management

2021 ◽  
Vol 19 (1) ◽  
pp. 94-104
Author(s):  
Raffaela Casciello ◽  
Marco Maffei ◽  
Fiorenza Meucci
Keyword(s):  
Earnings Management ◽  
Institutional Ownership ◽  
Previous Literature ◽  
Accounting Conservatism ◽  
Real Earnings Management ◽  
Conditional Conservatism ◽  
Institutional Shareholders ◽  
The Impact ◽  
The Relationship

This study investigates whether and how institutional shareholders affect the relation between unconditional conservatism and earnings management. We analyze the relation between unconditional conservatism and accrual-based earnings management and the relation between unconditional conservatism and real earnings management, focusing on the role of the institutional shareholders variable in these two relations. First, we find evidence of positive (negative) relations between unconditional conservatism and accrual-based (real) earnings management. Second, we demonstrate that the presence of institutional shareholders has a mitigating (amplifying) impact on the relation between unconditional conservatism and accrual-based (real) earnings management. This study contributes to enrich the previous literature in two ways. First, it extends the strand of research on the relation between accounting conservatism and earnings management (Garcìa Lara, García Osma, & Penalva, 2020; Chen, Hemmer, & Zhang, 2007; Gao, 2013), focusing on unconditional conservatism since it is less prevalent than conditional conservatism in previous literature (Ruch & Taylor, 2015). Second, it extends the strand of research on the impact of institutional ownership on accounting practices (Farooq & El Jai, 2012; Sakaki, Jackson, & Jory, 2017), highlighting the role of the institutional shareholders in the relation between unconditional conservatism and earnings management

scholarly journals The impact of industry specialist audit firms on pricing of discretionary accruals and earnings management: Australian evidence

2012 ◽  
Vol 9 (2) ◽  
pp. 158-177
Author(s):  
Harjinder Singh ◽  
May Sze Khoo
Keyword(s):  
Earnings Management ◽  
Audit Quality ◽  
Negative Relationship ◽  
Discretionary Accruals ◽  
Audit Committees ◽  
Firm Level ◽  
Audit Firms ◽  
The Impact ◽  
Industry Specialist

This paper examines the relationship between the capital market pricing of Australian publicly listed firms and earnings management (proxied by discretionary accruals) during a three-year pooled time-frame of 2008 to 2010. More importantly, the role of industry specialist audit firms on market returns and earnings management relationship is investigated. Main results indicate a significant negative relationship between firm returns and earnings management. However, there is no significance in the role of industry specialist audit firms on the firm returns and earnings management linkage. On the other hand, sensitivity tests indicate that industry specialist audit firms play in significant monitoring role for audit committees with less than fifty percent of their members classified as independent. One major contribution is for regulators (aiming to improve audit quality) to strengthen key firm-level corporate governance mechanisms. Specifically, by placing the consequences from this paper into perspective, there may be a greater likelihood of increased audit quality by altering audit committee’s structure, composition and authority levels.

scholarly journals Accounting conservatism or earnings management: A study of the allowance for doubtful accounts

2021 ◽  
Vol 18 (3) ◽  
pp. 175-190
Author(s):  
Timothy Gordon Bryan ◽  
Mark A. McKnight ◽  
Robert Houmes
Keyword(s):  
Earnings Management ◽  
Securities And Exchange Commission ◽  
Accounting Conservatism ◽  
Regression Analyses ◽  
Firm Level ◽  
Accounts Receivable ◽  
Level Data ◽  
Firm Level Data ◽  
The Relationship ◽  
Bad Debt

This paper empirically examines the relationship between conservatism and earnings management in chemical and allied products manufacturers via an analysis of the allowance for doubtful accounts and bad debt expense. Data used in the study included total accounts receivable, the total allowance for uncollectible accounts, total assets, and other firm-level data from the COMPUSTAT database of North American firms for companies with the standardized industry code (SIC) of 28 which represents chemical and allied products manufacturers. Chemical and allied products manufacturers were deemed an ideal target for the study because the industry typically has large balances in accounts receivable and allowance for doubtful accounts. Bad debt expense and write-offs were also used; these were obtained from the firms’ forms 10K Schedule II filed with the Securities and Exchange Commission (SEC) during the study period from 2005-2017. Analysts reports were also used, as obtained from Bloomberg for each firm. Results from subsequent regression analyses indicate that firms utilized excessive conservatism within the allowance for doubtful accounts to manage earnings to achieve earnings goals throughout the study period.

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