Journal ArticleDOI
Detecting Earnings Management: A New Approach
TLDR
In this paper, a new approach to test for accrual-based earnings management is proposed, which exploits the inherent property of accruality of accounting that any earnings management in one period must reverse in another period.Abstract:
This paper provides a new approach to test for accrual-based earnings management. Our approach exploits the inherent property of accrual accounting that any accrual-based earnings management in one period must reverse in another period. If the researcher has priors concerning the timing of the reversal, incorporating these priors can significantly improve the power and specification of tests for earnings management. Our results indicate that tests incorporating reversals increase test power by around 40% and provide a robust solution for mitigating model misspecification arising from correlated omitted variables.read more
Citations
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Journal ArticleDOI
Earnings quality: Evidence from the field
Ilia D. Dichev,John R. Graham,John R. Graham,Campbell R. Harvey,Campbell R. Harvey,Shivaram Rajgopal +5 more
TL;DR: In this article, a survey of CFOs of public companies and interviews with 12 CFO and two standard setters was conducted to understand their views on the quality of their own earnings.
Journal ArticleDOI
CEO Tenure and Earnings Management
Ashiq Ali,Weining Zhang +1 more
TL;DR: This article examined changes in CEOs' incentive to manage their firms' earnings during their tenure as CEO and found that earnings are more likely to be overstated in the early years than in the later years of CEOs' service.
Journal ArticleDOI
Audit Committee Financial Expertise and Earnings Management: The Role of Status
TL;DR: The authors found that audit committees with both financial expertise and high relative status are associated with lower levels of earnings management, as measured by accounting irregularities and abnormal accruals, and the benefits and limitations of financial expertise have been the focus of considerable debate.
Journal ArticleDOI
CEO tenure and earnings management
Ashiq Ali,Weining Zhang +1 more
TL;DR: This paper examined changes in CEOs' incentive to manage their firms' reported earnings during their tenure and found that earnings overstatement is greater in the early years than in the later years of CEOs' service.
Journal ArticleDOI
Audit committee financial expertise and earnings management: The role of status $
TL;DR: This paper found that audit committees with both financial expertise and high relative status are associated with lower levels of earnings management, as measured by accounting irregularities and abnormal accruals, which is relevant because expertise and relative status is important determinants of each party's ability to influence outcomes, particularly when parties face conflicting goals.
References
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Journal ArticleDOI
A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity
TL;DR: In this article, a parameter covariance matrix estimator which is consistent even when the disturbances of a linear regression model are heteroskedastic is presented, which does not depend on a formal model of the structure of the heteroSkewedness.
Journal ArticleDOI
Earnings Management During Import Relief Investigations
TL;DR: In this article, the authors test whether firms that would benefit from import relief attempt to decrease earnings through earnings management during import relief investigations by the United States International Trade Commission (ITC).
Posted Content
Detecting Earnings Management
TL;DR: In this paper, the authors evaluate alternative models for detecting earnings management by comparing the specification and power of commonly used test statistics across the measures of discretionary accruals generated by each model.
Journal ArticleDOI
Performance matched discretionary accrual measures
TL;DR: In this article, the authors examine the specification and power of tests based on performance-matched discretionary accruals, and make comparisons with tests using traditional discretionary accumrual measures (e.g., Jones and modified-Jones models).