Country factors in earnings management of ADR firms

The Effect of Geographic Distance on Earnings Management Decisions

Behavioral Research in Accounting ◽

10.2308/bria-2021-003 ◽

2022 ◽

Author(s):

Matthew J. Hayes ◽

Michael J. Mowchan

Keyword(s):

Earnings Management ◽

Geographic Distance ◽

Management Styles ◽

Experimental Setting ◽

Management Decisions ◽

Initial Experiment ◽

Country Factors ◽

Acceptable Method ◽

Distant Location ◽

Willingness To Use

Prior research has found evidence that country factors and management styles influence earnings management decisions in various geographic locations. Extending this research, we utilize an experimental setting to isolate the effect of geographic distance on the willingness to manage earnings in a near/distant location. In an initial experiment, we find less acceptable earnings management methods generate greater concerns about the method (ethicality and riskiness) leading to less willingness to manage earnings. Yet, greater geographic distance between the decisionmaker and reporting location attenuates these concerns, resulting in increased willingness to use a less acceptable method. In contrast, individuals are willing to use a more acceptable method to manage earnings regardless of geographic distance. These findings are consistent with construal level theory (CLT) and are corroborated in a second experiment where we find that greater geographic distance reduces managers’ focus on the means of earnings management, thereby reducing concerns about the method.

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Is Earnings Management Informational or Opportunistic? Evidence from ASEAN Countries

Gadjah Mada International Journal of Business ◽

10.22146/gamaijb.5437 ◽

2012 ◽

Vol 14 (1) ◽

pp. 61 ◽

Cited By ~ 1

Author(s):

Dewi Kusuma Wardani ◽

Indra Wijaya Kusuma

Keyword(s):

Earnings Management ◽

The Philippines ◽

Real Earnings Management ◽

Earning Management ◽

Positive Relation ◽

Real Earning ◽

Jones Model ◽

Country Factors ◽

Asean Countries

This study explores the informational and opportunistic characteristics of earnings management in ASEAN countries. Earnings management has an impact on the profitability of the companies. A positive relation between earnings management and future profitability reveals that earnings management is informational. However, negative a relation between earnings management and future profitability indicates that earnings management is opportunistic. This study uses data from the OSIRIS database. Four hundred and eighty five (485) companies from the Philippines, Indonesia, Malaysia, Singapore, and Thailand are used as a sample. This study focuses on 2 types of earnings management: (1) accrual earnings management and (2) real earning management. Modified Jones model is used for the accrual earnings management. Real earnings management follows Roychowdury (2006). The results show that the characteristics of earnings management are not consistent. Real earnings management is informational in Thailand, but opportunistic in Indonesia. Accruals earnings management is informational in the Philippines, but opportunistic in Malaysia. Country factors such as culture may explain the inconsistency of the results in ASEAN.Keywords: accruals earnings management; ASEAN countries; future profitability; informational; opportunistic; real earnings management

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Pengaruh Hubungan Politik Terhadap Manajemen Laba Pada Perusahaan Sektor Jasa Dengan Variabel Kontrol Ukuran Perusahaan Dan Kualitas Audit

Jurnal Keuangan dan Bisnis ◽

10.32524/jkb.v16i2.408 ◽

2018 ◽

Vol 16 (2) ◽

pp. 30

Author(s):

Dwikky Darmawan ◽

Weny Putri

Keyword(s):

Earnings Management ◽

Firm Size ◽

Significant Influence ◽

Service Sector ◽

Audit Quality ◽

Stock Exchange ◽

Secondary Data ◽

Annual Reports ◽

Political Connection ◽

Discretionary Accrual

The purpose of this study is to determine the effects of political connection toward the earnings management of service sector companies with control variables firm size and audit quality. Firm�s political connection measured by using dummy variable. Earnings management is proxied by discretionary accrual which is measured by using Modified Jones Model. The research data applied in this study are the secondary data which are taken from the annual reports of service sector companies that listed in Indonesian Stock Exchange of 2016-2017 periods. There are 330 observations fit as sample, which are taken by using purposive sampling method. Data are processed by applying the multiple linear regression test. The result show that the political connection had positive but not significant influence to earnings management. Firm size had negative but not significant influence to earnings management. Whereas the audit quality had a negative and significant influence to earnings management.

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The relation between R&D accounting treatment and the risk of the firm: Evidence from the Italian market

FINANCIAL REPORTING ◽

10.3280/fr2014-001002 ◽

2014 ◽

pp. 33-54 ◽

Cited By ~ 1

Author(s):

Riccardo Cimini ◽

Alessandro Gaetano ◽

Alessandra Pagani

Keyword(s):

Earnings Management ◽

Fiscal Year ◽

Investment Strategies ◽

Capital Assets ◽

Italian Market ◽

D Investment ◽

Firm Evidence

In this paper, we investigate the relation between the different accounting treatments of R&D expenditures and the risk of the entity in order to identify under which treatment insiders are more likely to carry out earnings management. By analysing the R&D investment strategies of a sample of 137 listed Italian entities that complied with the requirements of IAS 38 during fiscal year 2009, following Lantz and Sahut (2005), we calculate several indexes that show the preferences of insiders to account R&D expenditures as costs or capital assets, and we study the relation of such preferences with the risk of the entity, which we measure with the unlevered beta. We hypothesize that the entities, which considered the R&D investments as costs, are the riskiest ones due to the higher probability that insiders carried out earnings management. Our results confirm such hypothesis. This paper could have implications for academics and standard setters that could learn that behind accounting discretion, insiders could opportunistically behave against outsiders.

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