A study of earnings-management motives in the Anglo-American and Euro-Continental accounting models: The Canadian and French cases

International Journal of Accounting

Volumn 41, Issue 4, 2006, Pages 406-435

  Othman, Hakim Ben ^a   Zeghal, Daniel ^b  

^a UNIVERSITY OF CARTHAGE   (Tunisia)

^b UNIVERSITY OF OTTAWA   (Canada)

Author keywords

Discretionary accruals; Earnings management; Financial reporting; International accounting; Panel estimation techniques

Indexed keywords

EID: 33751100353     PISSN: 00207063     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.intacc.2006.09.004     Document Type: Article

References (87)

1. Backer T., Denton C., and Reitenga A. Stock option compensation and earnings management incentives. Journal of Accounting, Auditing & Finance 18 (2003) 557-578
2. Ball R., Kothari P., and Robin A. The effect of international institutional factors on properties of accounting earnings. Journal of Accounting and Economics 29 (2000) 1-51
3. Bartov E., Gul F.A., and Tsui J.S.L. Discretionary accruals models and audit qualifications. Journal of Accounting and Economics 30 (2001) 421-452
4. Becker C.L., DeFond M.L., Jiambalvo J., and Subramanyam K.R. The effect of audit quality on earnings management. Contemporary Accounting Research 15 (1998, Spring) 1-24
5. Beresford D. Internationalization of accounting standards. Accounting Horizons (1990, March) 99-107
6. Berle A., and Means G. The modern corporation and private property. 1st ed. (1932), Macmillan, New York
7. Bertin E., Jaussaud J., and Kanie A. Audit legal et gouvernance de l'entreprise, une comparaison France/Japon. Comptabilité Contôle Audit (2002, May) 117-138
8. Blancel F. La gouvernance des entreprises. 2nd ed. (1997), Economica, Paris
9. Burgstahle, D., & Eames, M. (1998). Management of earnings and analysts' forecasts. Working paper, University of Washington.
10. Burgstahler D., and Dichev I. Earnings management to avoid earnings decreases and losses. Journal of Accounting and Economics 24 (1997) 99-126
11. Burgstahler D., and Eames M. Earnings management to avoid losses and earnings decreases: Are analysts fooled?. Contemporary Accounting Research 20 (2003) 253-276
12. Cahan S. The effect of anti-trust investigation on discretionary accruals: A refined test of the political cost hypothesis. The Accounting Review 67 (1992) 77-95
13. Chaney P.K., Jeter D.C., and Lewis C.M. The use of accruals in earnings management: A permanent earnings hypothesis. Advances in Quantitative Analysis of Finance and Accounting 6 (1998) 103-135
14. Chaney P.K., and Lewis C.M. Earnings management and valuation under asymmetric information. Journal of Corporate Finance 1 (1995) 319-345
15. Chtourou, S., Bédard, J., & Courteau, L. (2001). Corporate governance and earnings management. Working paper, www.ssrn.com.
16. Collins D.W., and Hribar P. Earnings-based and accruals based market anomalies: One effect or two?. Journal of Accounting and Economics 29 (2000) 101-123
17. Cooke T.E., and Wallace R.S.O. Financial disclosure regulation and its environment: A review of further analysis. Journal of Accounting and Public Policy 5 (1990) 79-110
18. Davidson R.A., and Neu D. A note on the association between audit firm size and audit quality. Contemporary Accounting Research 9 (1993, Spring) 479-488
19. DeAngelo E., DeAngelo H., and Skinner D. Accounting choices of troubled companies. Journal of Accounting and Economics 17 (1994) 113-143
20. Dechow P.M., Sloan R.G., and Sweeny A.P. Detecting earnings management. The Accounting Review 70 (1995) 193-225
21. DeFond M.L. The association between changes in client firm agency costs and auditor switching. Auditing: A Journal of Practice and Theory 11 (1992) 16-31
22. DeFond M.L., and Jiambalvo J. Incidence and circumstances of accounting errors. The Accounting Review 66 (1991) 643-655
23. DeFond M.L., and Jiambalvo J. Factors related to auditor client disagreements over income-increasing accounting methods. Contemporary Accounting Research 9 (1993) 411-431
24. DeFond M.L., and Jiambalvo J. Debt covenant violation and abnormal accruals. Journal of Accounting and Economics 117 (1994) 145-176
25. DeFond M.L., and Park C.W. Smoothing income in anticipation of future earnings. Journal of Accounting and Economics 23 (1997) 115-139
26. DeFond M.L., and Subramanyam K.R. Auditor changes and discretionary accruals. Journal of Accounting and Economics 25 (1998) 35-67
27. Degeorge F., Patel J., and Zeckhauser R. Earnings management to exceed thresholds. The Journal of Business 72 (1999) 1-33
28. Dempsey S.J., Hunt H.G., and Schroeder N.W. Earnings management and corporate ownership structure: An examination of extraordinary item reporting. Journal of Business Finance & Accounting 20 (1993) 479-500
29. Douglas M. Culture and collective action: The relevance of culture (1989), Bergin & Garvey, New York
30. Drtina R., and Largay J. Pitfalls in calculating cash flows from operations. The Accounting Review (1985, April) 314-326
31. Erickson M., and Wang S. Earnings management by acquiring firms in stock for stock mergers. Journal of Accounting and Economics 27 (1999) 149-176
32. Fortin A. French accounting thought from 1970 to 1982 as reflected in the evolution of the Plan Comptable General. Advances in International Accounting 4 (1991) 65-79
33. Francis J.R., Maydew E.L., and Sparks H.C. The role of Big Six auditors in the credible reporting of accruals. Auditing: A Journal of Practice and Theory 18 (1999) 17-35
34. Francis J.R., and Wilson E. Audit change: A test of theories relating to agency costs and auditor differentiation. The Accounting Review 64 (1988) 663-682
35. Friedlan J.M. Accounting choices of initial public offerings. Contemporary Accounting Research 2 (1994) 1-31
36. Frydlender A., and Pham D. Relationships between accounting and taxation in France. European Accounting Review (1996) 848-945 (Supplement)
37. Gray S.J. Towards a theory of cultural influences on the development of accounting systems internationally. Abacus 24 (1988) 1-15
38. Gray, S. J., & Street, D. (2001). Observance of international accounting standards: Factors explaining non-compliancy by companies referring to the Use of IASs. Working paper, 24th EAA Congress, Athens, April, 18-20.
39. Guay E., Kothari S.P., and Watts R. A market based evaluation of discretionary accruals models. Journal of Accounting Research 34 (1996) 83-105 (supplement)
40. Guidry F., Leone A., and Rock S. Earnings-based bonus plans and earnings management business unit managers. Journal of Accounting and Economics 26 (1999) 113-142
41. Han J.C.Y., and Wang S. Political costs and earnings management of oil companies during the 1990 Persian Gulf crisis. The Accounting Review 73 (1998) 103-117
42. Healy P. The effect of bonus schemes on accounting-based dividend covenants. Journal of Accounting and Economics 7 (1985) 85-107
43. Healy P., and Palepu K.G. Effectiveness of accounting-based dividend covenants. Journal of Accounting and Economics 12 (1990) 97-124
44. Healy P., and Wahlen J.M. A review of the earnings management literature and its implications for standard setting. Accounting Horizons 13 (1999) 143-147
45. Hofstede G. Cultural dimensions in management and planning. Asian Pacific Journal of Management (1984, January) 83-94
46. Holthausen R., Larker D., and Sloan R. Annual bonus schemes and the manipulation of earnings. Journal of Accounting and Economics 19 (1995) 29-74
47. Hribar P., and Collins D.W. Errors in estimating accruals: Implications for empirical research. Journal of Accounting Research 40 (2002) 105-134
48. Hussein M.E. A comparative study of cultural influences on financial reporting in the US and The Netherlands. The International Journal of Accounting 31 (1996) 95-120
49. Jensen M.C., and Meckling W. Theory of the firm: Managerial behaviour agency costs and ownership structure. Journal of Financial Economics 3 (1976) 305-360
50. Jones J.J. Earnings management during import relief investigations. Journal of Accounting Research 29 (1991) 193-228
51. Key K.G. Political cost incentives for earnings management in the cable television industry. Journal of Accounting and Economics 3 (1997) 309-337
52. Labelle R., and Thibault M. Gestion des bénéfices à la suite d'une crise environnementale: Un test de l'hypothèse des coûts politiques. Comptabilité Contrôle Audit 1 (1998) 69-81
53. Larker D.F., and Richardson S.A. Fees paid to audit firms, accruals choices, and corporate governance. Journal of Accounting Research 42 (2004) 625-658
54. Leuz, C., Nanda, D., & Wysocki, D. (2000). Earnings management around the world. Working paper, EAA Congress, Munich, March 2000.
55. Leuz C., Nanda D., and Wysocki D. Earnings management and investor protection: An international comparison. Journal of Financial Economics 69 (2003) 505-527
56. Liberty S., and Zimmerman J.L. Labor union contract negotiations and accounting choices. The Accounting Review 4 (1986) 692-712
57. Magnan M., Nadeau C., and Cormier D. Earnings management during antidumping investigations: Analysis and implications. Journal of Financial Statement Analysis 3 (1999) 149-162
58. Makar S.D., and Alam P. Earnings management and anti-trust investigations: Political costs over business cycles. Journal of Business Finance & Accounting 25 (1998) 701-720
59. McCourt P., and Radcliffe G. Relation between financial reporting and taxes in France: Model for Europe?. British Tax Review (1995) 461-478
60. McNihols M.F. Research design issues in earnings management studies. Journal of Accounting and Public Policy 19 (2000) 313-345
61. McNihols M.F. Discussion of the quality of accruals and earnings: The role of accrual estimation errors. The Accounting Review 77 (2002) 293-315
62. Morin F., and Dupuy C. Le Coeur financier européen. 2nd ed. (1993), Economica, Paris
63. Mork R., Shleifer A., and Vishney R.W. Management ownership and market valuation. Journal of Financial Economics 20 (1998) 293-315
64. Nichols A., and Smith C. Auditor credibility and auditor changes. Journal of Accounting Research 21 (1983) 534-544
65. Organization for Economic Co-operation and development. Accounting practices in OECD member countries (1995), OECD, Paris
66. O'Sullivan M. Le rôle du marché boursier dans les systèmes nationaux de gouvernance. Revue Française de Gestion 28 (2002) 347-375
67. Palmrose Z. An analysis of auditor litigation and audit service quality. Accounting Review 63 (1988) 55-73
68. Peasnell, K. V., Pope, P. F., Young, S. (2000). Detecting earnings management using cross-sectional abnormal accrual models. Working paper, Lancaster University, UK.
69. Perera M.H.B. Towards a framework to analyze the impact of culture on accounting. The International Journal of Accounting 13 (1989) 561-569
70. Ragan S. Earnings management and the performance of seasoned equity offerings. Journal of Financial Economics 50 (1998) 101-112
71. Revsine L., Collins D.W., and Johnson B. Financial reporting and analysis. 2nd ed. (2002), Prentice-Hall, Upper Saddle River, NJ
72. Ronen J., and Sadan S. Smoothing income numbers (1981), Addisson-Wesley, Reading, Mass
73. Sheid J.C., and Walton P. European accounting guide. 2nd ed. (1995), H B & Jovanovich, London
74. Shivakumar L. Do firms mislead investors by overstating earnings before seasoned equity offering?. Journal of Accounting and Economics 29 (2000) 339-371
75. Simunic D.A., and Stein M.T. Product differentiation in auditing: Auditor choice in the market for unseasoned new issues (1987), Canadian Certified General Accountants Research Foundation, Vancouver, B.C.
76. Sloan R. Do stock prices fully reflect information in accruals and cash flows about future earnings?. The Accounting Review (1996, July) 289-316
77. Subramanyam K.R. The pricing of discretionary accruals. Journal of Accounting and Economics 5 (1996) 359-365
78. Sweeney A.P. Debt-covenant violations and managers' accounting responses. Journal of Accounting and Economics 17 (1994) 281-308
79. Teoh S.H., Welch I., and Wong T.J. Earnings management and the post-issue performance of seasoned equity offerings. Journal of Financial Economics 50 (1998) 63-99
80. Teoh S.H., Wong T.J., and Rao J. Are accruals during initial public offerings opportunistic?. Review of Accounting Studies 3 (1998) 175-208
81. Vander Bauwhede H., Willekens M., and Gaeremynk A. Audit firm size, public ownership, and firm's discretionary accruals management. The International Journal of Accounting 38 (2003) 1-22
82. Walton P. Accounting rules, taxation and medium-sized business in the United Kingdom, France and Germany. A study for the Foundation for Manufacturing and Industry, London (1995)
83. Wartfield T.D., Wild J.J., and Wild K.L. Managerial ownership, accounting choices and informativeness of earnings. Journal of Accounting and Economics 20 (1995) 61-92
84. Watts R.L., and Zimmerman J.L. Positive accounting theory (1986), Prentice Hall, Englewood Cliffs, New Jersey
85. Wildavsky, A. (1989). Frames and references come from cultures: A predictive theory, in M. Freilich editions, New York: Bergin and Garvey.
86. Williamson O. The Economics Institution of Capitalism: Firms, markets and relational contracting (1985), The Free Press, Mcmillan
87. Zimmerman J.L. Taxes and firm size. Journal of Accounting and Economics 5 (1983) 119-149