Download or read book CEO Origin and Accrual Based Earnings Management written by Yu Flora Kuang and published by . This book was released on 2014 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the influence of CEO origin on accrual-based earnings management and how these effects evolve over the CEO's tenure in office. Compared with CEOs promoted from within the company, CEOs recruited from outside have a stronger incentive to demonstrate their abilities in the initial years after their appointment; these outside CEOs also may have a lower expectation of surviving the short run. We predict and find that outside CEOs engage in greater income-increasing manipulation in the early years of their tenure. However, the differences in earnings management practices become insignificant after CEOs survive the short run. Our results are robust to a variety of alternative hypotheses and sensitivity checks. The findings thus show that CEO origin is an important factor for explaining financial reporting strategies; they also add to our understanding of CEO origin, managerial horizon problems, and the determinants of aggressive accounting.

Download or read book CEO Characteristics and Earnings Management written by Thai Quoc Nguyen and published by . This book was released on 2018 with total page 39 pages. Available in PDF, EPUB and Kindle. Book excerpt: Previous research suggests that share-financed acquirers inflate their earnings before merger and acquisition announcements. The existing literature also indicates that characteristics of chief executive officers (CEO) could affect earnings management. In this study, we extend prior studies by examining the relationships between CEO characteristics and accrual earnings management in share-financed acquirers before mergers and acquisitions. We find that CEOs with high financial expertise and high reputation are associated with lower abnormal accruals in stock acquirers. The correlations are statistically significant and consistently exist in the first year before deal announcements. The findings are robust as we measure abnormal accruals in different ways and employ different models. The evidence suggests that CEO characteristics have an impact on earnings management in the contexts of mergers and acquisitions and have some implications for practitioners.

Download or read book Earnings Management The Influence of Real and Accrual Based Earnings Management on Earnings Quality written by and published by GRIN Verlag. This book was released on 2024-01-31 with total page 81 pages. Available in PDF, EPUB and Kindle. Book excerpt: Master's Thesis from the year 2019 in the subject Business economics - Accounting and Taxes, University of Duisburg-Essen, course: Master Thesis, language: English, abstract: This paper delves into various theories and approaches, aiming to define and differentiate earnings management from related concepts such as fraud, expectation management, and impression management. It explores the goals and incentives driving earnings management, including maximizing or minimizing earnings, beating targets, and smoothing. At the onset of the new millennium, corporate scandals rocked the business world, eroding trust in management, boards of directors, and the accounting profession. In response, regulations and policies aimed at enhancing corporate governance and financial reporting were swiftly implemented. The credibility, clarity, and consistency of financial reporting practices play a pivotal role in enabling investors to make informed decisions. Accurate and fair financial performance representations, as opposed to inflated and misleading figures, are essential for market players, including shareholders and creditors. Investors rely on audited financial reports to guide their investment decisions, underscoring the critical importance of accuracy and reliability in publicly available financial disclosures. Auditors, by reducing the risk of material misstatement, ensure the integrity of the information disclosed in a company's financial statements. Management, with the goal of achieving promised targets and ensuring the company's existence, may engage in earnings management as a strategic contribution to corporate policy. Financial reporting serves as a means to distinguish well-performing companies from their counterparts, facilitating efficient resource allocation and empowering stakeholders to make effective decisions. The disclosed earnings results significantly impact a firm's overall business activities and management decisions, particularly in satisfying analysts' expectations, which can influence equity value. While accounting standards play a role, the quality of financial statements is more influenced by company-specific and institutional factors shaping managers' incentives. These factors lead to financial reporting practices being viewed as the outcome of a cost-benefit assessment.

Download or read book Earnings Based Compensation Schemes and Discretionary Accrual and Expenditure Decisions Over CEO Tenure written by Ramachandra (Ram) Natarajan and published by . This book was released on 2000 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper examines the link between the change in the sensitivities of compensation to accounting and market-based performance measures over CEO tenure and the discretionary accrual and expenditure decisions made by CEOs during their tenure. It finds that the sensitivity of compensation to earnings during the first half of CEO tenure is significantly greater than during the second half. The opposite is the case for the association of compensation with stock returns. For a given amount of earnings growth, those CEOs who make income-increasing decisions during the first half of their tenure, on average, get a significantly lower increase in cash compensation than those who make income-decreasing or no discretionary accrual decisions. The evidence suggests the existence of a contracting environment in which (a) the importance of earnings for contracting purposes decreases over CEO tenure and (b) high-ability CEOs separate themselves out from low-ability CEOs by taking income-decreasing earnings management decisions in the first half of their tenure and in equilibrium are rewarded more.

Download or read book Earnings Quality written by Jennifer Francis and published by Now Publishers Inc. This book was released on 2008 with total page 97 pages. Available in PDF, EPUB and Kindle. Book excerpt: This review lays out a research perspective on earnings quality. We provide an overview of alternative definitions and measures of earnings quality and a discussion of research design choices encountered in earnings quality research. Throughout, we focus on a capital markets setting, as opposed, for example, to a contracting or stewardship setting. Our reason for this choice stems from the view that the capital market uses of accounting information are fundamental, in the sense of providing a basis for other uses, such as stewardship. Because resource allocations are ex ante decisions while contracting/stewardship assessments are ex post evaluations of outcomes, evidence on whether, how and to what degree earnings quality influences capital market resource allocation decisions is fundamental to understanding why and how accounting matters to investors and others, including those charged with stewardship responsibilities. Demonstrating a link between earnings quality and, for example, the costs of equity and debt capital implies a basic economic role in capital allocation decisions for accounting information; this role has only recently been documented in the accounting literature. We focus on how the precision of financial information in capturing one or more underlying valuation-relevant constructs affects the assessment and use of that information by capital market participants. We emphasize that the choice of constructs to be measured is typically contextual. Our main focus is on the precision of earnings, which we view as a summary indicator of the overall quality of financial reporting. Our intent in discussing research that evaluates the capital market effects of earnings quality is both to stimulate further research in this area and to encourage research on related topics, including, for example, the role of earnings quality in contracting and stewardship.

Download or read book Earnings Management and CEO Cash Compensation written by Hoje Jo and published by . This book was released on 2009 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Using firms' cash compensation data, we examine the empirical relationship between earnings management and the weight placed on accounting performance measure in compensation. Our results indicate that the weight on accounting income in compensation decreases as the tendency of using discretionary accruals increases. A plausible interpretation of the findings is that compensation committees view the managers' use of discretionary accruals as providing crude measure of managers' and firm performance and they actively intervene to reduce the ability of executives to manipulate compensation by lowering the weight on accounting performance.

Download or read book The Horizon Problem and Earnings Management written by Julie Gee and published by . This book was released on 1996 with total page 156 pages. Available in PDF, EPUB and Kindle. Book excerpt: The horizon problem, which arises when an agency relationship exists and the time horizons of the agent and principal do not coincide, is examined for its effect on the earnings management behaviour of Chief Executive Officers in their final year of office.

Download or read book Earnings Management written by Joshua Ronen and published by Springer Science & Business Media. This book was released on 2008-08-06 with total page 587 pages. Available in PDF, EPUB and Kindle. Book excerpt: This book is a study of earnings management, aimed at scholars and professionals in accounting, finance, economics, and law. The authors address research questions including: Why are earnings so important that firms feel compelled to manipulate them? What set of circumstances will induce earnings management? How will the interaction among management, boards of directors, investors, employees, suppliers, customers and regulators affect earnings management? How to design empirical research addressing earnings management? What are the limitations and strengths of current empirical models?

Download or read book The Effect of CEO s General Ability on Company Performance written by Leila Zbib and published by . This book was released on 2019 with total page 103 pages. Available in PDF, EPUB and Kindle. Book excerpt: I show that Chief Executive Officers (CEOs) that have accumulated general managerial skills through lifetime work experience demonstrate enhanced performance in the takeover market, as measured by market reactions to the deal. These reactions are more pronounced when the CEO acquires small, but complex firms, suggesting target selection as an underlying mechanism. I find no evidence that the effect stems from the structure of the deal or the CEO's past M&A activity. I also find that the documented increase in innovative activity for firms with high general ability is heightened when the CEO makes acquisitions. In sum, the evidence suggests that the increased pay for generalist CEOs is partially justified by their performance in the takeover market. I also provide evidence that CEOs with broad experience in their background are more likely to utilize discretionary accruals than CEOs with focused experience. This appears to be a result of transitions to CEOs with high general ability and not simply a selection of these CEOs by firms that utilize discretionary accruals extensively. Two mechanisms appear to underlie this result. First, CEOs with general ability tend to manage earnings when more options are exercised. Second, CEOs with high general ability appear more willing to bear the risk inherent in the use of discretionary accruals given their enhanced tolerance for failure stemming from outside career options.

Download or read book Chalk It Up to Experience written by Kourosh Amirkhani and published by . This book was released on 2022 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide evidence that firms managed by CEOs with high general ability, or broad experience in their background, are more likely to utilize discretionary accruals to manage earnings than CEOs with focused experience. Cross-sectional variation suggests that the mechanism underlying the increased use of discretionary accruals is generalist CEOs' increased willingness to bear the risk inherent in managing earnings given their enhanced tolerance for failure stemming from outside career options. Importantly, the practice is more pronounced for CEOs of firms with suspect earnings. The evidence suggests that the diversity of CEOs' experience influences incentives to manage earnings.

Download or read book Real and Accrual Based Earnings Management in the Pre and Post Sarbanes Oxley Periods written by Daniel A. Cohen and published by . This book was released on 2008 with total page 52 pages. Available in PDF, EPUB and Kindle. Book excerpt: We document that accrual-based earnings management increased steadily from 1987 until the passage of the Sarbanes Oxley Act (SOX) in 2002, followed by a significant decline after the passage of SOX. Conversely, the level of real earnings management activities declined prior to SOX and increased significantly after the passage of SOX, suggesting that firms switched from accrual-based to real earnings management methods after the passage of SOX. We also find evidence that the accrual-based earnings management activities were particularly high in the period immediately preceding SOX. Consistent with these results, we find that firms that just achieved important earnings benchmarks used less accruals and more real earnings management after SOX when compared to similar firms before SOX. Finally, our analysis provides evidence that the increases in accrual-based earnings management in the period preceding SOX were concurrent with increases in the fraction of equity based compensation.

Download or read book CEO Inside Debt and Earnings Management written by Sandip Dhole and published by . This book was released on 2015 with total page 57 pages. Available in PDF, EPUB and Kindle. Book excerpt: This study examines the impact of CEO inside debt on earnings management. Theory predicts that CEOs with higher inside debt holdings adopt less risky corporate policies and choose investment policies that result in less volatile earnings. Under such circumstances, CEOs would face weaker demand for income smoothing. Consistent with these expectations, our results reveal that CEO inside debt is negatively associated with both accrual and real activities based earnings management. We also find that firms with higher levels of CEO inside debt are less likely to meet or slightly beat analysts' earnings forecasts. Further, the capital market response to positive earnings surprises is greater when CEOs hold higher positions of inside debt. Overall, our findings suggest that inside debt counteracts CEOs' incentives to smooth earnings through earnings management and investors understand the deterrence effect of inside debt on earnings management.

Download or read book CEO Incentives and Earnings Management written by Daniel Bergstresser and published by . This book was released on 2009 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: We provide evidence that the use of discretionary accruals to manipulate reportedearnings is more pronounced at firms where the CEO s potential total compensation is more closely tied to the value of stock and option holdings. In addition, during years of high accruals, CEOs exercise unusually large amounts of options and CEOs and other insiders sell large quantities of shares.

Download or read book Earnings quality and earnings management written by Sanjay Wikash Bissessur and published by Rozenberg Publishers. This book was released on 2005 with total page 217 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book The Changes of Accounting Conservatism Around Earnings Restatements written by Xin Xu and published by . This book was released on 2009 with total page 266 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Download or read book Earnings Management written by Thomas E. McKee and published by Thomson South-Western. This book was released on 2005 with total page 224 pages. Available in PDF, EPUB and Kindle. Book excerpt: Learn how to legally manage your earnings with EARNINGS MANAGEMENT! This finance text demystifies earnings management and provides you with 28 reasonable and legal techniques. Read this text and you will gain valuable knowledge about earning management concepts and tools and gain insight into the management decisions that can shape financial statements and the underlying quality of the earnings.

Download or read book Accrual Based Earnings Management in State Owned Companies written by Francesco Capalbo and published by . This book was released on 2015 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: Purpose - - European Unio ...