Journal ArticleDOI
Earnings management to avoid earnings decreases and losses
David Burgstahler,Ilia D. Dichev +1 more
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TLDR
In this article, the authors provide evidence that firms manage reported earnings to avoid earnings decreases and losses and find evidence that two components of earnings, cash flow from operations and changes in working capital, are used to achieve increases in earnings.About:
This article is published in Journal of Accounting and Economics.The article was published on 1997-12-01. It has received 3645 citations till now. The article focuses on the topics: Earnings quality & Earnings surprise.read more
Citations
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Journal ArticleDOI
The economic implications of corporate financial reporting
TL;DR: This paper found that the majority of managers would avoid initiating a positive NPV project if it meant falling short of the current quarter's consensus earnings, and more than three-fourths of the surveyed executives would give up economic value in exchange for smooth earnings.
Journal ArticleDOI
Earnings management and investor protection: an international comparison
TL;DR: In this paper, the authors examine systematic differences in earnings management across 31 countries and propose an explanation for these differences based on the notion that insiders, in an attempt to protect their private control benefits, use earnings management to conceal firm performance from outsiders.
Book
Heuristics and Biases: The Psychology of Intuitive Judgment
TL;DR: In this article, a review is presented of the book "Heuristics and Biases: The Psychology of Intuitive Judgment, edited by Thomas Gilovich, Dale Griffin, and Daniel Kahneman".
Journal ArticleDOI
Individual differences in reasoning: Implications for the rationality debate?
TL;DR: In this paper, the authors examined the implica- tions of individual differences in performance for each of the four explanations of the normative/descriptive gap, including performance errors, computational limitations, the wrong norm being applied by the experi- menter, and a different construal of the task by the subject.
Journal ArticleDOI
Mental accounting matters
TL;DR: Mental accounting is the set of cognitive operations used by individuals and households to organize, evaluate, and keep track of financial activities as discussed by the authors, where outcomes are perceived and experienced, and how decisions are made and subsequently evaluated.
References
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Book ChapterDOI
Prospect theory: an analysis of decision under risk
Daniel Kahneman,Amos Tversky +1 more
TL;DR: In this paper, the authors present a critique of expected utility theory as a descriptive model of decision making under risk, and develop an alternative model, called prospect theory, in which value is assigned to gains and losses rather than to final assets and in which probabilities are replaced by decision weights.
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
Loss Aversion in Riskless Choice: A Reference-Dependent Model
Amos Tversky,Daniel Kahneman +1 more
TL;DR: In this article, the authors present a reference-dependent theory of consumer choice, which explains such effects by a deformation of indifference curves about the reference point, in which losses and disadvantages have greater impact on preferences than gains and advantages.
Journal Article
Detecting earnings management
TL;DR: In this paper, the authors evaluate alternative accrual-based models for detecting earnings management and find that they appear well specified when applied to a random sample of firm-years.
Journal ArticleDOI
Causes and Consequences of Earnings Manipulation: An Analysis of Firms Subject to Enforcement Actions by the SEC*
TL;DR: In this article, the authors investigate the extent to which the earnings manipulations can be explained by earnings management hypotheses and the relation between earnings manipulation and weaknesses in firms' internal governance structures, and the capital market consequences experienced by firms when the alleged earnings manipulation are made public.