Earnings management under price regulation: Empirical evidence from the Spanish electricity industry

Energy Economics

Volumn 27, Issue 2, 2005, Pages 279-304

  Gill de Albornoz, Belén ^a   Illueca, Manuel ^a,b  

^a UNIVERSITAT JAUME I   (Spain)

^b University of Valencia   (Spain)

Author keywords

Discretionary accruals; Earnings management; Electricity industry; Political costs; Price regulation

Indexed keywords

COSTS; DECISION MAKING; PROFESSIONAL ASPECTS; REGULATORY COMPLIANCE; SOCIAL ASPECTS;

EARNING MANAGEMENT; POLITICAL VISIBILITY; PRICE REGULATION;

ELECTRIC INDUSTRY;

ELECTRICITY INDUSTRY; ENERGY MARKET; PRICE DETERMINATION; REGULATORY APPROACH; TARIFF STRUCTURE;

EASTERN HEMISPHERE; EURASIA; EUROPE; SOUTHERN EUROPE; SPAIN; WORLD;

EID: 18744378295     PISSN: 01409883     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.eneco.2004.12.005     Document Type: Article

References (60)

1. Act 40/1994 on the national electricity system organisation.
2. Act 54/1997 on the electricity industry.
3. B. Asensio Adaptación del PGC a las empresas del sector eléctrico Adaptation of the general accounting plan to electricity companies Partida Doble 91 1998 60-65
4. C.E. Boynton P.S. Dobbins G.A. Plesko Earnings management and the corporate alternative minimum tax Journal of Accounting Research 30 1992 131-153 (Supplement)
5. S.F. Cahan The effect of antitrust investigations on discretionary accruals: A refined test of the political cost hypothesis The Accounting Review 67 1 1992 77-95
6. P.K. Chaney C.M. Lewis Income smoothing and under-performance in initial public offerings Journal of Corporate Finance 4 1998 1-29
7. P.K. Chaney D.C. Jeter C.M. Lewis The use of accruals in income smoothing: A permanent earnings hypothesis Advances in Quantitative Analysis of Finance and Accounting 6 1998 103-135
8. L.S. Daley R.L. Vigeland The effects of debt covenant and political costs on the choice of accounting methods: The case of accounting for R & D costs Journal of Accounting and Economics 5 1983 195-211
9. P.M. Dechow Accounting earnings and cash-flows as measures of firm performance. The role of accounting accruals Journal of Accounting and Economics 18 1994 3-42
10. P.M. Dechow R.G. Sloan A.P. Sweeney Detecting earnings management The Accounting Review 70 2 1995 193-225
11. M.L. Defond J. Jiambalvo Debt covenant violation and manipulation of accruals Journal of Accounting and Economics 17 1994 145-176
12. M.L. Defond C.W. Park Smoothing income in anticipation of future earnings Journal of Accounting and Economics 23 1997 115-139
13. D. Dhaliwal J. Salamon E.D. Smith The effect of owner versus management control on the choice of accounting methods Journal of Accounting and Economics 4 1982 41-53
14. European Union Directive 96/92/CE on the internal electricity market, December 19th.
15. Garza-Gómez, X., Okumara, M., Kunimura, M. 1999. Discretionary accrual models and the accounting process, SSRN working paper series, October.
16. J. Han S. Wang Political costs and earnings management of oil companies during the 1990 Persian gulf crisis The Accounting Review 73 1 1998 103-117
17. P.M. Healy The impact of bonus schemes on accounting decisions Journal of Accounting and Economics 7 1985 85-107
18. R.W. Holthausen D.F. Larcker R.G. Sloan Annual bonus schemes and the manipulation of earnings Journal of Accounting and Economics 19 1995 29-74
19. D.C. Jeter L.L. Shivakumar Cross-sectional estimation of abnormal accruals using quarterly and annual data: Effectiveness in detecting event-specific earnings management Journal of Accounting and Business Research 29 4 1999 299-319
20. S. Johnson R. Ramanan Discretionary accounting changes from successful efforts to full cost methods: 1970-1976 The Accounting Review, January 1988 96-110
21. J.J. Jones Earnings management during import relief investigations Journal of Accounting Research 29 2 1991 193-228
22. R.S. Kaplan Comments on Paul Healy: Evidence on the effect of bonus schemes on accounting procedure and accrual decisions Journal of Accounting and Economics 7 1985 109-113
23. R. Kasznik On the association between voluntary disclosure and earnings management Journal of Accounting Research 37 1 1999 57-81
24. K.G. Key Political cost incentives for earnings management in the cable television industry Journal of Accounting and Economics 23 1997 309-337
25. S.P. Kothari Capital markets research in accounting Journal of Accounting and Economics 31 1-3 2001 105-231
26. R. Labelle Bond covenants and changes in accounting policy: Canadian evidence Contemporary Accounting Research 6 1990 677-698
27. S. Lilien V. Pastena Determinants of intra-method choice in the oil and gas industry Journal of Accounting and Economics 4 1982 145-170
28. M. Magnan C. Nadeau D. Cormier Earnings management during antidumping investigations: Analysis and implications Canadian Journal of Administrative Sciences 16 2 1999 149-162
29. S.D. Makar P. Alam Earnings management and antitrust investigations: political costs over business cycles Journal of Business Finance and Accounting 25 5 and 6 1998 701-720
30. Martín Bueno, M., 1997. Efectos económicos en la industria eléctrica española de los principios y normas contables en los años 1983-94 (Economic effects of the accounting rules on the Spanish electricity industry between 1983 and 1994), unpublished Phd Dissertation. Alcalá de Henares University.
31. J.I. Martinez Churiaque Liberalización de mercados: Contabilidad y empresas eléctricas Markets liberalisation: Accounting and electricity companies Partida Doble 91 1998 46-59
32. S.E. Moyer Capital adequacy ratio regulations and accounting choices in commercial banks Journal of Accounting and Economics 13 2 1990 123-154
33. National Commission of the Electricity System (CNSE), 1998. Informe en el que se recomienda al gobierno que no acepte la solicitud de las empresas eléctricas de que el estado les conceda derechos para la titulización de los costes de transición a la competencia que no estén contemplados en la legislación vigente ('Report on the recommendation to the government not to accept the electricity companies' requirement to grant them the rights for securitization of the competition transition costs which are not contemplated in the extant legislation'), Madrid, December 28th. ref. IE 003/98.
34. F. Navissi Earnings management under price regulation Contemporary Accounting Research 16 2 1999 281-304
35. K. Peasnell P.F. Pope S. Young Detecting earnings management using cross-sectional abnormal accrual models Journal of Accounting and Business Research 30 4 2000 313-326
36. S. Peltzman Towards a more general theory of regulation Journal of Law and Economics 19 2 1976 211-240
37. Royal Decree 1643/1990 to approve the general accounting plan.
38. Royal Decree 437/1998 to approve the rules to adapt the general accounting plan to the electricity companies.
39. Royal Decree 1821/1991 to establish the electricity tariff for 1992.
40. Royal Decree 1594/1992 to establish the electricity tariff for 1993.
41. Royal Decree 2320/1993 to establish the electricity tariff for 1994.
42. Royal Decree 2550/1994 to establish the electricity tariff for 1995.
43. Royal Decree 2204/1995 to establish the electricity tariff for 1996.
44. Royal Decree 2657/1996 to establish the electricity tariff for 1997.
45. Royal Decree 2016/1997 to establish the electricity tariff for 1998.
46. Royal Decree 2821/1998 to establish the electricity tariff for 1999.
47. Royal Decree 2066/1999 to establish the electricity tariff for 2000.
48. Royal Decree 3490/2000 to establish the electricity tariff for 2001.
49. Royal Decree 1483/2001 to establish the electricity tariff for 2002.
50. T.W. Scott Pension disclosures under SFAS no. 87: Theory and evidence Contemporary Accounting Research 8 1 1991 62-81
51. Shivakumar, L.L., 1996. Estimating abnormal accruals for detection of earnings management, working paper, Vanderbilt University, March.
52. L.L. Shivakumar Do firms mislead investors by overstating earnings before seasoned equity offerings? Journal of Accounting and Economics 29 2000 339-371
53. G. Stigler The theory of economic regulation Bell Journal of Economics and Management Science 2 1971 3-21
54. T. Sutton The proposed introduction of current cost accounting in the UK: Determinants of corporate preference Journal of Accounting and Economics 10 1988 127-149
55. UNESA, 1999. La liberalización de sistema eléctrico españl y los costes de transición a la competencia (The liberalisation of the Spanish electricity system and the competition transition costs), Madrid, January.
56. R.L. Watts J.L. Zimmerman Towards a positive theory of the determination of accounting Standards The Accounting Review 53 1978 112-134
57. R.L. Watts J.L. Zimmerman The demands for and supply of accounting theories: The market for excuses The Accounting Review, April 1979 273-305
58. R.L. Watts J.L. Zimmerman Positive accounting theory 1986 Prentice Hall Englewood Cliffs, NJ
59. R.L. Watts J.L. Zimmerman Positive accounting theory, a ten year perspective The Accounting Review 65 1 1990 131-156
60. J. Wong Political costs and an intra-period accounting choice for export tax credits Journal of Accounting and Economics 10 1988 37-51