• Knowledge Management Research
• /
• v.15 no.4
• /
• pp.1-14
• /
• 2014

This study investigates earnings management of IPO firms in knowledge-based-industry. we analyse the relation between earnings management and R&D expenses(Research and development expense)which is an important expenditure in knowledge based management. First, we found that the earnings management is the largest in the year when the firm is enrolled on the market. Second, the IPO firms have higher DA(discretionary accruals) than existing firms on the market and the size of R&D expenses is larger, too. Finally, in the IPO firms in knowledge-based-industry, the higher accounting receivable and R&D expenses are, the more happens earnings management. Our study shows that the IPO firms of knowledge-basedindustry have high R&D expenses which are core expenditure. Also, earnings management has happened frequently in the IPO firms.

• Asia-Pacific Journal of Business
• /
• v.15 no.3
• /
• pp.309-323
• /
• 2024

Purpose - This study investigates whether firms engage in Real Earnings Management surrounding preliminary earnings announcements when experiencing a reversal of accounting earnings signs. Design/methodology/approach - We use ordinary least squares regression analysis to examine the association between the reversal of accounting earnings signs and three measures of REM(abnormal operating cash flows, abnormal discretionary expenses, and abnormal production costs). Findings - Our findings indicate that both profit-to-loss and loss-to-profit reversals are positively associated with all three measures of REM. This suggests that managers use various REM activities to mitigate negative consequences or enhance positive perceptions associated with earnings reversals. Research implications or Originality - This study provides new insights into the relationship between preliminary earnings announcements and REM by documenting that the reversal of accounting earnings signs is a significant determinant of managers' REM decisions. Our findings highlight the importance of scrutinizing REM activities surrounding preliminary earnings announcements, particularly when firms experience a reversal of accounting earnings signs.

• Asian Journal of Business Environment
• /
• v.11 no.4
• /
• pp.5-16
• /
• 2021

Purpose: This study aims to investigate the impact of auditor-client traffic convenience on accrual -based and real earnings management of the client firms. Research design, data and methodology: Using a sample of firms listed in Shanghai and Shenzhen Stock Exchanges over the period of 2007 to 2018, this paper empirically investigates the association between auditor-client traffic convenience and earnings management. We use three measures of auditor-client traffic convenience: railway traffic convenience, expressway traffic convenience, and air traffic convenience. The accrual-based earnings management is measured by abnormal accruals estimated by industry and year using the Modified Jones Model. Results: Findings indicate that traffic convenience is conducive to detecting and restraining positive accrual earnings management and real earnings management. After changing the measurement of independent variable and dependent variable, including potential omitted variables, the results are statistically unchanged. Further, the research shows that traffic convenience can not only improve audit quality, but also lead to higher fee premiums. Auditors didn't share with clients the cost reduction benefits caused by traffic convenience. Conclusions: Traffic convenience provides auditors with easy access to the client firms, alleviating the information asymmetry and improving corporate earnings quality. The findings have implications for regulators, audit practitioners and stakeholders.

• The Journal of the Korea Contents Association
• /
• v.17 no.6
• /
• pp.319-328
• /
• 2017

Earnings management is a collection of management decisions which firms do not report the true performance. Many prior studies suggest that earnings management could be the results of either managerial earnings management or manager's private information for future performance. This study attempts to delve into the fundamental implications inherent in earnings management by analyzing how earnings management affects future firm performance in public institutions. If discretionary accruals as a measurement of earnings management embrace manager's private information, it will have a positive effect on future performance in succeeding period. In contrast, if discretionary accruals embrace manager's opportunistic earnings management, it will have a negative effect on future performance in succeeding period. Empirical findings are summarized as following.: Earnings managements are negatively associated with future firm performance for all succeeding period. This negative relationship continues for all succeeding period. The overall results can be serve as a evidence that the discretionary accruals capture opportunistic earnings management on average.

• The Journal of Asian Finance, Economics and Business
• /
• v.7 no.10
• /
• pp.51-61
• /
• 2020

The study aims to compare whether using Earnings Response Coefficient (ERC) is better than using the new concept of Accounting Earnings Response Coefficient (AERC) in determining the earnings quality response coefficient value. Also, the study seeks to explain the effect of company characteristics and corporate governance on AERC through voluntary disclosure and information asymmetry. Research samples include 69 manufacturing companies listed on the Indonesian Stock Exchange over the period 2014-2017. The data come from annual reports, stock market prices, CSPI, EPS, stock returns and market returns. The research model is tested using the structural equation model (SEM) with partial least square (PLS). The results showed the value of the earnings response coefficient produced by AERC and ERC was different. Earnings quality resulting from AERC regression by adding CFO values better reflects the actual earnings quality. These results are consistent with the concept built from the proposition about earnings quality at AERC, that quality earnings are informative accounting earnings. The theoretical findings of this study provide an explanation that operational cash flow plays a role in evaluating earnings quality, while providing reinforcement that the ERC regression model fails to detect stock market reactions to information relevant to the aggregated values of accounting earnings.

• The Journal of Asian Finance, Economics and Business
• /
• v.7 no.12
• /
• pp.389-395
• /
• 2020

Earnings management is a matter of concern for organizations because it affects the interests of stakeholders. This reduces the quality of information on financial statements of the organizations when the organization performs earnings management behavior. The objective of the article is to examine the impact of corporate governance on earnings management of all Vietnamese listed banks from 2015 to 2019. The article uses time-series data and ordinary least square (OLS) with Eviews 10.0 software to test the regression model. The agency and asymmetry information theory is used to explain the relationship between corporate governance and earnings management. The study results show that two variables - the foreign members of the board of directors and audit committee - have an opposite effect on earnings management behavior of Vietnamese listed banks. Therefore, the managers of listed banks need to raise awareness to express responsibility for honest and reasonable information on the financial statements. This creates trust and credibility for stakeholders. Moreover, Central bank of Vietnam should monitor regularly and enforce strict sanctions to limit earnings management behavior of listed banks. This contributes to improving the quality of accounting information in the Vietnamese banking sector to meet the trend of international economic integration.

• Journal of Digital Convergence
• /
• v.19 no.2
• /
• pp.51-60
• /
• 2021

In this study, Based on the analysis of the correlation between internal control quality and earnings management, this article discusses the correlation between internal control quality and real activity earnings management and accrued earnings management. For this study, by introducing the concept, classification, measurement method and model of internal control and earnings management, the research hypothesis of this article was proposed. In this analysis, Use the relevant measurement model to calculate the actual activity earnings management level and accrued earnings management level of the enterprise, as the explained variable, establish a model for regression and were analyzed. Also, this study could find the final results draws a conclusion through empirical research: there is a significant negative correlation between the internal control quality of listed companies, real activity earnings management, and accrued earnings management. On the basis of this conclusion, the analysis of possible causes provides a basis for the development of internal control theory and the supervision and control of earnings management behavior in the future.

• Journal of the Korea Convergence Society
• /
• v.8 no.11
• /
• pp.363-372
• /
• 2017

This study analyzed how management earnings forecasts would have an effect on future earnings quality. The analysis period of study was from 2003 till 2009 (ofrom 2004 till 2011) based on variables of interest (dependent variables) and the annual data from a total of 475 companies that publicly announced manager's operating earnings forecasts among securities listing companies were used for analysis. As a result, first, it appeared that the more optimistic the manager's earnings forecasts were for the current term, the lower the future earnings quality was. Second, it was found that the lower the accuracy of the manager's earnings forecasts was for the current term, the lower the future earnings quality was. Such findings suggest that management earnings forecasts will be used for determining future earnings quality.

• Journal of Distribution Science
• /
• v.22 no.6
• /
• pp.11-22
• /
• 2024

Purpose: Thisstudy aimsto analyze the distribution of audit committee, independent board of commissioners, and institutional ownership on earnings quality with strengthening earnings growth. Research Design data and Methodology: This quantitative research uses a comparative causal approach. The research population consists of manufacturing companies in the basic and chemical industry sector listed on the Indonesia Stock Exchange in 2016-2022. Samples were obtained as many as 112 using purposive sampling method. The analysis technique to test the hypothesis uses multiple linear regression tests and moderation tests with an absolute difference approach. Results: The results showed that the audit committee and board of commissioners provide a significant positive distribution on earnings quality, while institutional ownership provides a significant negative distribution on earnings quality. Earnings growth strengthens the distribution of the audit committee and independent board of commissioners on earnings quality. However, earnings growth does not strengthen the distribution of institutional ownership on earnings quality. Conclusions: Audit oversight from audit committee and management performance oversight from the independent board of commissioners improves the credibility of earnings quality. Management oversight from institutional ownership reduces earnings quality. The interaction of earnings growth with maximum supervision can improve earnings quality, except for supervision from institutional ownership.

• Asia-Pacific Journal of Business
• /
• v.15 no.3
• /
• pp.325-349
• /
• 2024

Purpose - This study aims to identify and document earnings management, sources of investment growth, and CEO personality traits as three determinants of difference in the value-earnings convexity. Design/methodology/approach - To test our hypotheses, we run cross-sectional regressions based on the Fama and Macbeth (1973) procedure using US firm-year observations from 1968 to 2017. Findings - First, we show that the value-earnings association decreases with accruals and real earnings management. Second, we demonstrate that the value-earnings convexity is weaker when investment growth is supported by off-balance-sheet intangible assets relative to on-balance-sheet tangible and intangible assets. Finally, we find that extraverted CEOs and CEOs who are more open to experience are better at exploiting the growth opportunities implied by the current accounting profitability. Conscientious and neurotic personality traits of CEOs make no difference in exploiting the growth opportunities that the current accounting profitability suggests. Research implications or Originality - This study complements and extends the literature on real options and behavioral agency by demonstrating that the value-earnings convexity depends not only on accounting profitability and investment growth rate, but also on earnings management, sources of investment growth, and CEO personality traits.