Accounting concepts dictate that separately disclosed components should contain separate useful information. This paper examines the relations between income statement components and analysts＇ earnings forecasts and ...Accounting concepts dictate that separately disclosed components should contain separate useful information. This paper examines the relations between income statement components and analysts＇ earnings forecasts and forecast errors. Regressions explaining earnings forecasts using earnings components provide a better fit than regression using just aggregate income to explain forecasts. We interpret this as consistent with the hypothesis that analysts use incremental information in components not available in aggregate income. However, additional tests based on predictability of forecast errors indicate that analysts do not incorporate all information available in components into earnings forecasts. In addition, this inefficiency appears to increase at longer forecast horizons.展开更多
Earnings management is an important topic in modern financial accounting. With the development of social economy, practical circles and theory circles have studied the earnings management more and more carefully. In t...Earnings management is an important topic in modern financial accounting. With the development of social economy, practical circles and theory circles have studied the earnings management more and more carefully. In this paper, we will contrast accrual earnings management with real earnings management in definition, motivation, approach, and economic consequences, and hope to provide some suggestions for our government.展开更多
Capital market participants take seriously into consideration the value relevance of earnings for security valuation.This study examines the value relevance of earnings when earnings are transitory,i.e.,there is great...Capital market participants take seriously into consideration the value relevance of earnings for security valuation.This study examines the value relevance of earnings when earnings are transitory,i.e.,there is great variability in earnings.It hypothesizes that the relationship between earnings and security returns worsens when earnings are transitory and this robustness is country specific.The dataset consists of more than 1,100 French firm-year observations over a nine year period.Empirical results show that when earnings are transitory,investors pay more attention to operating cash flows and less attention to earnings,a result indicating that investors penalize firms with unstable earnings.These results should be of great importance to financial analysts,investors and bankers for investing and credit decisions,especially after the recent global financial crisis.展开更多
This paper aims to find evidence for the improvements on the present earnings forecast models through analyzing the correlation among financial ratios, auditor opinion of listed companies and their future earnings. Th...This paper aims to find evidence for the improvements on the present earnings forecast models through analyzing the correlation among financial ratios, auditor opinion of listed companies and their future earnings. This paper uses two statistical regression methods including Logistic model and Linear model to examine the inner interaction between financial ratios and future earnings from qualitative and quantitative perspectives respectively. Empirical tests find that financial ratios, especially ROE, can help to predict future earnings. Then we add auditor opinion variable into Logistic model to test whether going concern opinion in the auditor reports can be helpful for earnings forecast. Result shows the degree of optimistic statement of going concern opinion is significantly correlated with future earnings but with the disturbance of earnings management.展开更多
Based on deep analyzing the colluding and checking relation of income statement and cash flow statement, this paper chooses and designs the corresponding profit index, carries on the comparative study of information c...Based on deep analyzing the colluding and checking relation of income statement and cash flow statement, this paper chooses and designs the corresponding profit index, carries on the comparative study of information content between accounting earnings and cash flows. The paper utilizes the financial data of Chinese listed company in manufacturing industry from 2003 to 2005, adopts the price model and analyzes empirical study about two kinds of profit indexes and value relevance. Studies have suggested： accounting earnings and cash flows all have relevant relations to stock prices; however, the relevance between cash flow and stock price is stronger, and cash flows have higher information quality.展开更多
The purpose of this paper is to examine whether and to what extend Greek state-owned enterprises engage in earnings management techniques during 2012-2016.Most prior studies on earnings management have used data from ...The purpose of this paper is to examine whether and to what extend Greek state-owned enterprises engage in earnings management techniques during 2012-2016.Most prior studies on earnings management have used data from large economies with relative stable macroeconomic contexts(e.g.,USA).Our knowledge about earnings management in smaller economies is rather limited.To fill this void,we conducted our study in Greece and focused on the abovementioned period,which is very interesting given that Greece experienced a substantial political and macroeconomic instability(e.g.,four elections,one referendum,capital controls,and two memorandums).Two different models(i.e.,The Earnings Distribution Model and the Modified Jones Model)are used to provide answers to the research questions.The sample is composed of 50 state-owned enterprises.The results show that Greek state-owned enterprises did not adopt any earnings management techniques during the examined period.These results are rather robust given that they come from two different models.According to the literature,macroeconomic and political instability provide incentives to managers to use earnings management techniques.Interestingly though,our results suggest that this is not the case for a smaller economy.The findings of this study will allow investors,auditors,and users of the financial statements to make better decisions when studying companies that are experiencing those difficulties.The adoption of two different methods and the similar results is an indication of more robust and valid findings.展开更多
Taiwan,China changed its earnings forecast policy from mandatory to voluntary disclosure in 2005.In this study,the inferences of voluntary earnings forecast are examined based on forecasts issued by listed firms.This ...Taiwan,China changed its earnings forecast policy from mandatory to voluntary disclosure in 2005.In this study,the inferences of voluntary earnings forecast are examined based on forecasts issued by listed firms.This study suspects that insiders have a temptation to strategically manipulate financial forecast information to influence markets and thus receive extra rents.Under the new earnings forecast disclosure policy,the number of disclosing firm decreases but the precision of earnings forecast increases.The empirical result from dynamic panel data evidences the forecast error of voluntary disclosure may negatively impact firm values.Furthermore,there is a positive relationship between insiders'trading profit and manipulation of earnings forecasts.As volatility in insider manipulation increases,it is difficult for the investors to predict the real intention of insiders,and insiders may achieve greater benefits from trading.This study also observes that many listed companies hold investor conferences to provide earnings guidance in Taiwan,China.The reason may be that investor conference is more flexible and has less forecast error cost than the formal financial forecast.This study provides important insights into earnings forecast policy in emerging markets.The competent authority should improve corporate governance and develop monitoring functions to abate forecast manipulation.展开更多
This paper examines chaebol(Korean business group)firms'earnings management methods in pre-and post-financial crisis periods in Korea.The financial crisis resulted in chaebol firms increasing their reliance on the...This paper examines chaebol(Korean business group)firms'earnings management methods in pre-and post-financial crisis periods in Korea.The financial crisis resulted in chaebol firms increasing their reliance on the external capital markets as chaebol firms achieved internal financing through arbitrary transactions among their affiliated and contracted firms.This produced a higher demand for financial reporting transparency in chaebol firms and strengthened monitoring from investors.These changes in the business environment in Korea following the financial crisis are likely to have led chaebol firms to reduce earnings management by using managers'discretion in accounting accruals and to seek alternative means to manage earnings through abnormal operating decisions which are referred to as real activities manipulation.The authors find that chaebol firms have significantly decreased accrual-based earnings management after the financial crisis of Asian compared to non-chaebol firms.The authors also find that chaebol firms have become more inclined to engage in real earnings management after the financial crisis.The results suggest that chaebol firms have shifted their earnings management methods from accruals manipulation to real activities manipulation which is harder to be detected by external auditors and regulators.This study provides insight into the changes in chaebol firms'earnings management methods triggered by economic shock.The findings suggest that the shift in chaebol firms'financing sources from internal to external capital markets and the increased demand for transparent financial information in the post-financial crisis period are likely to have influenced chaebol firms to substitute real earnings management for accrual-based earnings management after the financial crisis.展开更多
This study examines the relationship between earnings quality and insider trading. Using downward earnings restatement firms to identify low-quality earnings, we find that insiders outsell non-earnings restatement fir...This study examines the relationship between earnings quality and insider trading. Using downward earnings restatement firms to identify low-quality earnings, we find that insiders outsell non-earnings restatement firms of their holdings over the period from two years before to one year after the beginning of the restatement period. In addition, the amounts of restatement are positively associated with the excess insider selling. We also provide evidence that excess insider selling predicts excessive earnings manipulations that eventually lead to GAAP （Generally Accepted Accounting Principles） violation. Some researchers argued that insider trading can be an efficient way of transferring insider information to the capital markets. Our evidence of intensive insider selling in the context of earnings restatements implies that insiders disregard their fiduciary duties to the shareholders during the periods of deteriorating financial performance.展开更多
Researches on factors that affecting earnings quality are significant for regulators'decisions and the improving of earnings quality.After reviewing the research findings on what are affecting earnings qualities f...Researches on factors that affecting earnings quality are significant for regulators'decisions and the improving of earnings quality.After reviewing the research findings on what are affecting earnings qualities from the following 6 fields:accounting standards,firm characteristics,board and auditing committees'characteristics,managerial characteristics,auditing firm characteristics and other factors,the author conclude the current findings and foresee the future research focus on earnings quality.展开更多
This study investigates annual earnings analysis with ARIMA （Autoregressive Integrated Moving Average） for future earnings prediction. Earnings prediction is very important to be used in various aspect of decision m...This study investigates annual earnings analysis with ARIMA （Autoregressive Integrated Moving Average） for future earnings prediction. Earnings prediction is very important to be used in various aspect of decision making process, such as： investor, creditor, analyst, academicians, practitioners, etc.. Evidence supports the ARIMA model that it is more accurate. It also has a smaller size of error value.展开更多
There are three ways to manage earnings, namely, accruals earnings management, real activities manipulation, and shifting of core expense. The famous methods to manage earnings are accruals earnings management and rea...There are three ways to manage earnings, namely, accruals earnings management, real activities manipulation, and shifting of core expense. The famous methods to manage earnings are accruals earnings management and real activities manipulation. Usually, real activities manipulation is conducted on the going period. The action will increase the loss for the firms at the end of the period. To avoid the loss, managers will manage earnings through accruals （discretionary accruals）. Therefore, the objective of this study is to investigate whether real activities manipulation positively influences accruals earnings management. To investigate the issue, this study collected data from Indonesia Stock Exchange （IDX）. Samples of this study are the manufacturing companies. There are 196 firms from the year 2003 to 2007. The results of this study support the research hypothesis that real activities manipulation positively influences accruals earnings management. The higher the real activities manipulation effects, the higher the accruals earnings management at the end of the period.There are three ways to manage earnings, namely, accruals earnings management, real activities manipulation, and shifting of core expense. The famous methods to manage earnings are accruals earnings management and real activities manipulation. Usually, real activities manipulation is conducted on the going period. The action will increase the loss for the firms at the end of the period. To avoid the loss, managers will manage earnings through accruals （discretionary accruals）. Therefore, the objective of this study is to investigate whether real activities manipulation positively influences accruals earnings management. To investigate the issue, this study collected data from Indonesia Stock Exchange （IDX）. Samples of this study are the manufacturing companies. There are 196 firms from the year 2003 to 2007. The results of this study support the research hypothesis that real activities manipulation positively influences accruals earnings management. The higher the real activities manipulation effects, the higher the accruals earnings management at the end of the period.展开更多
This paper overviews earnings management incentive of listed companies, cost in transactions with stockholders and major in researching some countermeasures how management.
This paper examines systematic differences in earnings management through real activity manipulation and accrual manipulation across 7 Asia countries. The study proposes arguments that in economies with high investor ...This paper examines systematic differences in earnings management through real activity manipulation and accrual manipulation across 7 Asia countries. The study proposes arguments that in economies with high investor protection, managers prefer to manage earnings through real activity manipulation rather than through accrual manipulation because accrual manipulation is more likely to draw auditors or regulators scrutiny than real decisions about pricing and production. The study findings are consistent with prediction. Despite being in economies with high investor protection, managers still have bigger discretion in managing earnings through real activities rather than accrual manipulation.展开更多
This study investigates the relationship between the tone of financial disclosures and managers’earnings management behavior using Form 20-F filings of Chinese firms listed in the U.S.during 2002–2014.The results sh...This study investigates the relationship between the tone of financial disclosures and managers’earnings management behavior using Form 20-F filings of Chinese firms listed in the U.S.during 2002–2014.The results show that the proportion of positive,uncertain,or modal words used in financial disclosures is positively related to corporate earnings management,implying that managers attempt to conceal earnings management behavior by manipulating the tone of their financial reports.In addition,robustness tests are conducted using an alternative proxy for earnings management that considers the effects of the financial crisis and separately examines the information and non-information technology industries.The results suggest that the tone used in financial disclosures has informative value,and textual analysis can be an effective tool for identifying earnings management.展开更多
According to the idea of cost control based on the value chain, several important factors are necessary. Firstly, it is necessary to have enough resources, which must be invested to create advantageous value chain bas...According to the idea of cost control based on the value chain, several important factors are necessary. Firstly, it is necessary to have enough resources, which must be invested to create advantageous value chain based on customer value. It is also necessary to be sure of the cost advantage of the value chain. Secondly, the consumption of resources must be reduced as much as possible to enable the smallest operating cost for the value chain and make sure of the cost advantage based on maximum business value or profit. It is a kind of cost control from the whole view of creation and supply of value. In practice, it is also a kind of cost control system based on the value chain. It includes enough control and necessary resource investment from the view of the value creation, and keeps consumption of resources to a reasonable level from the view of the value supply. The main object of the first factor is to construct the advantageous value chain from creating customer value; and the second factor is to strengthen the advantageous value chain from supplying or producing customer value. Therefore it is a new kind of idea to explore this cost control from the whole view of creation and supply of value. It is more profitable for businesses to gain sustainable competitive advantage.展开更多
文摘Accounting concepts dictate that separately disclosed components should contain separate useful information. This paper examines the relations between income statement components and analysts＇ earnings forecasts and forecast errors. Regressions explaining earnings forecasts using earnings components provide a better fit than regression using just aggregate income to explain forecasts. We interpret this as consistent with the hypothesis that analysts use incremental information in components not available in aggregate income. However, additional tests based on predictability of forecast errors indicate that analysts do not incorporate all information available in components into earnings forecasts. In addition, this inefficiency appears to increase at longer forecast horizons.
文摘Earnings management is an important topic in modern financial accounting. With the development of social economy, practical circles and theory circles have studied the earnings management more and more carefully. In this paper, we will contrast accrual earnings management with real earnings management in definition, motivation, approach, and economic consequences, and hope to provide some suggestions for our government.
文摘Capital market participants take seriously into consideration the value relevance of earnings for security valuation.This study examines the value relevance of earnings when earnings are transitory,i.e.,there is great variability in earnings.It hypothesizes that the relationship between earnings and security returns worsens when earnings are transitory and this robustness is country specific.The dataset consists of more than 1,100 French firm-year observations over a nine year period.Empirical results show that when earnings are transitory,investors pay more attention to operating cash flows and less attention to earnings,a result indicating that investors penalize firms with unstable earnings.These results should be of great importance to financial analysts,investors and bankers for investing and credit decisions,especially after the recent global financial crisis.
基金This paper is sponsored by National Natural Science Foundation of China （No.70172023） and Education Department of China （01JA630019）. The author is grateful to Prof. Minghai Wei of Sun Yat-sen University and Prof.
文摘This paper aims to find evidence for the improvements on the present earnings forecast models through analyzing the correlation among financial ratios, auditor opinion of listed companies and their future earnings. This paper uses two statistical regression methods including Logistic model and Linear model to examine the inner interaction between financial ratios and future earnings from qualitative and quantitative perspectives respectively. Empirical tests find that financial ratios, especially ROE, can help to predict future earnings. Then we add auditor opinion variable into Logistic model to test whether going concern opinion in the auditor reports can be helpful for earnings forecast. Result shows the degree of optimistic statement of going concern opinion is significantly correlated with future earnings but with the disturbance of earnings management.
文摘Based on deep analyzing the colluding and checking relation of income statement and cash flow statement, this paper chooses and designs the corresponding profit index, carries on the comparative study of information content between accounting earnings and cash flows. The paper utilizes the financial data of Chinese listed company in manufacturing industry from 2003 to 2005, adopts the price model and analyzes empirical study about two kinds of profit indexes and value relevance. Studies have suggested： accounting earnings and cash flows all have relevant relations to stock prices; however, the relevance between cash flow and stock price is stronger, and cash flows have higher information quality.
文摘The purpose of this paper is to examine whether and to what extend Greek state-owned enterprises engage in earnings management techniques during 2012-2016.Most prior studies on earnings management have used data from large economies with relative stable macroeconomic contexts(e.g.,USA).Our knowledge about earnings management in smaller economies is rather limited.To fill this void,we conducted our study in Greece and focused on the abovementioned period,which is very interesting given that Greece experienced a substantial political and macroeconomic instability(e.g.,four elections,one referendum,capital controls,and two memorandums).Two different models(i.e.,The Earnings Distribution Model and the Modified Jones Model)are used to provide answers to the research questions.The sample is composed of 50 state-owned enterprises.The results show that Greek state-owned enterprises did not adopt any earnings management techniques during the examined period.These results are rather robust given that they come from two different models.According to the literature,macroeconomic and political instability provide incentives to managers to use earnings management techniques.Interestingly though,our results suggest that this is not the case for a smaller economy.The findings of this study will allow investors,auditors,and users of the financial statements to make better decisions when studying companies that are experiencing those difficulties.The adoption of two different methods and the similar results is an indication of more robust and valid findings.
文摘Taiwan,China changed its earnings forecast policy from mandatory to voluntary disclosure in 2005.In this study,the inferences of voluntary earnings forecast are examined based on forecasts issued by listed firms.This study suspects that insiders have a temptation to strategically manipulate financial forecast information to influence markets and thus receive extra rents.Under the new earnings forecast disclosure policy,the number of disclosing firm decreases but the precision of earnings forecast increases.The empirical result from dynamic panel data evidences the forecast error of voluntary disclosure may negatively impact firm values.Furthermore,there is a positive relationship between insiders'trading profit and manipulation of earnings forecasts.As volatility in insider manipulation increases,it is difficult for the investors to predict the real intention of insiders,and insiders may achieve greater benefits from trading.This study also observes that many listed companies hold investor conferences to provide earnings guidance in Taiwan,China.The reason may be that investor conference is more flexible and has less forecast error cost than the formal financial forecast.This study provides important insights into earnings forecast policy in emerging markets.The competent authority should improve corporate governance and develop monitoring functions to abate forecast manipulation.
文摘This paper examines chaebol(Korean business group)firms'earnings management methods in pre-and post-financial crisis periods in Korea.The financial crisis resulted in chaebol firms increasing their reliance on the external capital markets as chaebol firms achieved internal financing through arbitrary transactions among their affiliated and contracted firms.This produced a higher demand for financial reporting transparency in chaebol firms and strengthened monitoring from investors.These changes in the business environment in Korea following the financial crisis are likely to have led chaebol firms to reduce earnings management by using managers'discretion in accounting accruals and to seek alternative means to manage earnings through abnormal operating decisions which are referred to as real activities manipulation.The authors find that chaebol firms have significantly decreased accrual-based earnings management after the financial crisis of Asian compared to non-chaebol firms.The authors also find that chaebol firms have become more inclined to engage in real earnings management after the financial crisis.The results suggest that chaebol firms have shifted their earnings management methods from accruals manipulation to real activities manipulation which is harder to be detected by external auditors and regulators.This study provides insight into the changes in chaebol firms'earnings management methods triggered by economic shock.The findings suggest that the shift in chaebol firms'financing sources from internal to external capital markets and the increased demand for transparent financial information in the post-financial crisis period are likely to have influenced chaebol firms to substitute real earnings management for accrual-based earnings management after the financial crisis.
文摘This study examines the relationship between earnings quality and insider trading. Using downward earnings restatement firms to identify low-quality earnings, we find that insiders outsell non-earnings restatement firms of their holdings over the period from two years before to one year after the beginning of the restatement period. In addition, the amounts of restatement are positively associated with the excess insider selling. We also provide evidence that excess insider selling predicts excessive earnings manipulations that eventually lead to GAAP （Generally Accepted Accounting Principles） violation. Some researchers argued that insider trading can be an efficient way of transferring insider information to the capital markets. Our evidence of intensive insider selling in the context of earnings restatements implies that insiders disregard their fiduciary duties to the shareholders during the periods of deteriorating financial performance.
文摘Researches on factors that affecting earnings quality are significant for regulators'decisions and the improving of earnings quality.After reviewing the research findings on what are affecting earnings qualities from the following 6 fields:accounting standards,firm characteristics,board and auditing committees'characteristics,managerial characteristics,auditing firm characteristics and other factors,the author conclude the current findings and foresee the future research focus on earnings quality.
文摘This study investigates annual earnings analysis with ARIMA （Autoregressive Integrated Moving Average） for future earnings prediction. Earnings prediction is very important to be used in various aspect of decision making process, such as： investor, creditor, analyst, academicians, practitioners, etc.. Evidence supports the ARIMA model that it is more accurate. It also has a smaller size of error value.
文摘There are three ways to manage earnings, namely, accruals earnings management, real activities manipulation, and shifting of core expense. The famous methods to manage earnings are accruals earnings management and real activities manipulation. Usually, real activities manipulation is conducted on the going period. The action will increase the loss for the firms at the end of the period. To avoid the loss, managers will manage earnings through accruals （discretionary accruals）. Therefore, the objective of this study is to investigate whether real activities manipulation positively influences accruals earnings management. To investigate the issue, this study collected data from Indonesia Stock Exchange （IDX）. Samples of this study are the manufacturing companies. There are 196 firms from the year 2003 to 2007. The results of this study support the research hypothesis that real activities manipulation positively influences accruals earnings management. The higher the real activities manipulation effects, the higher the accruals earnings management at the end of the period.There are three ways to manage earnings, namely, accruals earnings management, real activities manipulation, and shifting of core expense. The famous methods to manage earnings are accruals earnings management and real activities manipulation. Usually, real activities manipulation is conducted on the going period. The action will increase the loss for the firms at the end of the period. To avoid the loss, managers will manage earnings through accruals （discretionary accruals）. Therefore, the objective of this study is to investigate whether real activities manipulation positively influences accruals earnings management. To investigate the issue, this study collected data from Indonesia Stock Exchange （IDX）. Samples of this study are the manufacturing companies. There are 196 firms from the year 2003 to 2007. The results of this study support the research hypothesis that real activities manipulation positively influences accruals earnings management. The higher the real activities manipulation effects, the higher the accruals earnings management at the end of the period.
文摘This paper overviews earnings management incentive of listed companies, cost in transactions with stockholders and major in researching some countermeasures how management.
文摘This paper examines systematic differences in earnings management through real activity manipulation and accrual manipulation across 7 Asia countries. The study proposes arguments that in economies with high investor protection, managers prefer to manage earnings through real activity manipulation rather than through accrual manipulation because accrual manipulation is more likely to draw auditors or regulators scrutiny than real decisions about pricing and production. The study findings are consistent with prediction. Despite being in economies with high investor protection, managers still have bigger discretion in managing earnings through real activities rather than accrual manipulation.
基金supported by the National Social Science Foundation of China(Grant No.17BJY019).
文摘This study investigates the relationship between the tone of financial disclosures and managers’earnings management behavior using Form 20-F filings of Chinese firms listed in the U.S.during 2002–2014.The results show that the proportion of positive,uncertain,or modal words used in financial disclosures is positively related to corporate earnings management,implying that managers attempt to conceal earnings management behavior by manipulating the tone of their financial reports.In addition,robustness tests are conducted using an alternative proxy for earnings management that considers the effects of the financial crisis and separately examines the information and non-information technology industries.The results suggest that the tone used in financial disclosures has informative value,and textual analysis can be an effective tool for identifying earnings management.
文摘According to the idea of cost control based on the value chain, several important factors are necessary. Firstly, it is necessary to have enough resources, which must be invested to create advantageous value chain based on customer value. It is also necessary to be sure of the cost advantage of the value chain. Secondly, the consumption of resources must be reduced as much as possible to enable the smallest operating cost for the value chain and make sure of the cost advantage based on maximum business value or profit. It is a kind of cost control from the whole view of creation and supply of value. In practice, it is also a kind of cost control system based on the value chain. It includes enough control and necessary resource investment from the view of the value creation, and keeps consumption of resources to a reasonable level from the view of the value supply. The main object of the first factor is to construct the advantageous value chain from creating customer value; and the second factor is to strengthen the advantageous value chain from supplying or producing customer value. Therefore it is a new kind of idea to explore this cost control from the whole view of creation and supply of value. It is more profitable for businesses to gain sustainable competitive advantage.
