The frequency and magnitude of earnings management: Time-series and multi-threshold comparisons

International Review of Economics and Finance

Volumn 19, Issue 4, 2010, Pages 671-685

  Chen, Shaw K ^a   Lin, Bing Xuan ^a   Wang, Yaping ^b   Wu, Liansheng ^b  

^a UNIVERSITY OF RHODE ISLAND   (United States)

^b Peking University   (China)

Author keywords

Analysts' forecasted earnings; Avoid decreases; Avoid losses; Earnings distribution; Earnings management

Indexed keywords

EID: 77956649983     PISSN: 10590560     EISSN: None     Source Type: Journal    
DOI: 10.1016/j.iref.2010.02.005     Document Type: Article

References (52)

1. Agarwal S., Chomsisengphet S., Liu C., Rhee S.G. Earnings management behaviors under different economic environments: Evidence from Japanese banks. International Review of Economics and Finance 2007, 16:429-443.
2. Anderson M., Banker R., Ravindran S. Executive compensation in the information technology industry. Management Science 2000, 46:530-547.
3. Barth M.E., Elliott J.A., Finn M.W. Market rewards associated with increasing earnings patterns. Journal of Accounting Research 1999, 37:387-413.
4. Beaver W.H., McNichols M.F. The characteristics and valuation of loss reserves of property casualty insurers. Review of Accounting Studies 1998, 3:73-95.
5. Beaver W.H., McNichols M.F., Nelson K.K. An alternative interpretation of the discontinuity in earnings distributions. Working Paper 2003, Stanford University.
6. Burgstahler D., Dichev I. Earnings management to avoid earnings decreases and losses. Journal of Accounting and Economics 1997, 24:99-126.
7. Chen F. Capital market pressures and earnings management: Evidence from U.S. dual-class firms. Working paper 2008, University of Toronto.
8. Chen Q., Jiang W. Analysts' weighting of private and public information. Review of Financial Studies 2006, 19:319-355.
9. DeAngelo L. Managerial competition, information costs, and corporate governance: The use of accounting performance measures in proxy contests. Journal of Accounting and Economics 1988, 10:3-36.
10. DeAngelo H., DeAngelo L., Skinner D. Reversal of fortune: Dividend signaling and the disappearance of sustained earnings growth. Journal of Financial Economics 1996, 40:341-371.
11. DeBondt W.F.M., Thaler R.H. Do security analysts overreact?. American Economic Review 1990, 80:52-57.
12. Dechow P.M., Sloan R.G. Executive incentives and the horizon problem: An empirical investigation. Journal of Accounting and Economics 1991, 14:51-89.
13. Dechow P.M., Sloan R.G., Sweeney A.P. Detecting earnings management. Accounting Review 1995, 70:193-225.
14. Dechow P.M., Richardson S.A., Tuna I. Why are earnings kinky? An examionation of the earnings management explanation. Review of Accounting Studies 2003, 8:355-384.
15. Degeorge F., Patel J., Zeckhauser R. Earnings management to exceed thresholds. Journal of Business 1999, 72:1-33.
16. Doyle J.T., McNichols M.F., Soliman M.T. Do managers define 'street' earnings to meet or beat analyst forecasts? 2004, University of Utah, Working Paper.
17. Dubin R.A. Spatial autocorrelation and neighborhood quality. Regional Science and Urban Economics 1992, 22:433-452.
18. DuCharme L.L., Malatesta P.H., Sefcik S.E. Earnings management, stock issues, and shareholder lawsuits. Journal of Financial Economics 2004, 71:27-49.
19. Durtschi C., Easton P. Earnings management? The shapes of the frequency distributions of earnings metrics are not evidence ipso facto. Journal of Accounting Research 2005, 43:521-556.
20. Elton J.E., Gruber M.J., Gultekin M.N. Professional expectations: Accuracy and diagnosis of errors. Journal of Financial and Quantitative Analysis 1984, 19:351-363.
21. Frecka T., Hopwood W. The effect of outliers on the cross-sectional distributional properties of financial ratios. Accounting Review 1983, 58:115-128.
22. Gaver J.J., Gaver K.M., Austin J.R. Additional evidence on bonus plans and income management. Journal of Accounting and Economics 1995, 19:3-28.
23. Givoly D., Lakonishok J. The information content of financial analysts' forecasts of earnings. Journal of Accounting and Economics 1979, 1:165-185.
24. Gu Z., Wu J.S. Earnings skewness and analyst forecast bias. Journal of Accounting and Economics 2003, 35:5-29.
25. Hall B.J. Six challenges of equity-based pay design. Journal of Applied Corporate Finance 2003, 15:21-33.
26. Hall B.J., Murphy K. Stock options for undiversified executives. Journal of Accounting and Economics 2002, 33:3-42.
27. Hayn C. The information content of losses. Journal of Accounting and Economics 1995, 20:125-153.
28. Healy P.M. The effect of bonus schemes on accounting decisions. Journal of Accounting and Economics 1985, 7:85-107.
29. Healy P., Palepu K.G. Effectiveness of accounting-based dividend covenants. Journal of Accounting and Economics 1990, 12:97-124.
30. Healy P.M., Wahlen J.M. A review of the earnings management literature and its implications for standards setting. Accounting Horizons 1999, 13:365-383.
31. Holland D. Earnings management: A methodological review of the distribution of reported earnings approach 2004, Monash University, Working Paper.
32. Itner C.D., Lambert R.A., Larcker D.F. The structure and performance consequences of equity grants to employees of new economy firms. Journal of Accounting and Economics 2003, 34:89-127.
33. Jones J. Earnings management during import relief investigations. Journal of Accounting Research 1991, 29:193-228.
34. Kasznik R., McNichols M.F. Does meeting earnings expectations matter? Evidence from analyst forecast revisions and share prices. Journal of Accounting Research 2002, 40:727-759.
35. Kim Y., Park M.S. Pricing of seasoned equity offers and earnings management. Journal of Financial and Quantitative analysis 2005, 40:435-463.
36. Leuz C., Nanda D., Wysocki P.D. Earnings management and investor protection: An international comparison. Journal of Financial Economics 2003, 69:505-527.
37. Liu C., Ryan S., Wahlen J. Differential valuation implications of loan loss provisions across banks and fiscal quarters. Accounting Review 1997, 72:133-146.
38. Louis H. Earnings management and the market performance of acquiring firms. Journal of Financial Economics 2004, 74:121-148.
39. McNichols M.F. Research design issues in earnings management studies. Journal of Accounting and Public Policy 2000, 19:313-345.
40. Murphy K.J. Stock-based pay in new economy firms. Journal of Accounting and Economics 2003, 34:129-147.
41. Rangan S. Earnings management and the performance of seasoned equity offerings. Journal of Financial Economics 1998, 50:101-122.
42. Shen C.H., Chih H.L. Investor protection, prospect theory, and earnings management: An international comparison of the banking industry. Journal of Banking & Finance 2005, 29:2675-2697.
43. Shuto A. Earnings management to exceed thresholds: A comparative analysis of consolidated earnings and parent-only earnings 2003, Senshu University, Working Paper.
44. Sweeney A.P. Debt-covenant violations and managers' accounting responses. Journal of Accounting and Economics 1994, 17:281-308.
45. Teoh S.H., Wong T.J. Why new issues and high-accrual firms underperform: The role of analysts' credulity. Review of Financial Studies 2002, 15:869-900.
46. Teoh S.H., Welch I., Wong T.J. Earnings management and the underperformance of seasoned equity offerings. Journal of Financial Economics 1998, 50:63-99.
47. Teoh S.H., Welch I., Wong T.J. Earnings management and the long-run market performance of initial public offerings. Journal of Finance 1998, 53:1935-1974.
48. Teoh S.H., Wong T.J., Rao G. Are accruals during initial public offerings opportunistic?. Review of Accounting Studies 1998, 3:175-208.
49. Titteringtom D.M., Smith A.F., Makov U.E. Statistical analysis of finite mixture distributions 1985, John Wiley and Sons.
50. Xue Y.F. Information content of earnings management: Evidence from managing earnings to exceed thresholds 2004, Work paper, Massachusetts Institute of Technology.
51. Zhang X. Information uncertainty and analyst forecast behavior. Contemporary Accounting Research 2006, 23:565-590.
52. Zhao Y., Chen K.H. Staggered boards and earnings management. Accounting Review 2008, 83:1347-1381.