DigitalUM :: Browsing by Subject "Earnings management"

Browsing by Subject "Earnings management"

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Open Access
A Review on the Multidimensional Analysis of Earnings Quality
(2019) Licerán Gutiérrez, Ana; Cano Rodríguez, Manuel
There is a generalized consensus among accounting researchers about the multidimensional nature of earn-ings quality: Earnings quality depends on a series of characteristics that enhance the usefulness of theearnings figure for decision making. In this paper, we undertake a literature revision on empirical researchon earnings quality that reveals that, although earnings quality is probably the most recurrent topic in ac-counting, empirical research that have treated earnings quality as a multidimensional concept is almostinexistent. In this sense, we document that: (1) Most of the empirical papers on earnings quality deal withjust one earnings characteristic, not including the potential effect of the other characteristics related to earn-ings quality. (2) Some characteristics (particularly, accruals quality and, in a lesser way, conservatism) arewidely employed for representing earnings quality, whereas other characteristics (smoothness, persistence)are much less used by researchers. (3) The research on the relationships among the different earningsquality characteristics is scant and with mixed results. (4) Only a few papers develop multidimensionalmeasures of earnings quality, but these measures are based on too restrictive assumptions and there is noevidence of superiority over single-dimension measures. We complement our bibliometric analysis by dis-cussing the limitations of both the single-dimension approach and the multidimensional approaches usedto date, illustrating our arguments with a simulation process. Henceforth, this review contributes to priorliterature highlighting the main problems in prior literature for earnings quality measurement.
Open Access
An international comparison of incentives for earnings management in order to meet analysts forecasts
(Universidad de Murcia, Servicio de Publicaciones, 2021) Callao Gastón, Susana; Jarne Jarne, José Ignacio
Previous investigations have shown that when earnings meet analysts forecasts, the market reacts positively, and when these forecasts are not reached, the market reacts negatively. For this reason, forecasts become goals to beat, and as the literature has revealed, this creates an incentive for earnings management. The present paper extends prior research, providing evidence that the magnitude of the reward (penalty) for companies meeting (failing to meet) earnings forecasts differs depending on the market. In addition, it reveals that the strength of the incentive for companies to manage their earnings differs depending on the market in which they are listed. We compare six stock markets and find that the most powerful incentives arise when the reward for meeting the forecasts or the penalty for not doing so is greater
Open Access
Audit Committee Competence and Earnings Management in Europe
(Universidad de Murcia, Servicio de Publicaciones, 2022) Zarza Herranz, César; Reguera Alvarado, Nuria; López Iturriaga, Félix J.
This study analyses the association between the competence of audit committee members and earnings management in a sample of 142 non-financial firms from France, Germany, Italy, Spain, and the United Kingdom over the 2006–2013 period. We measure members’ competence through their dedication and expertise. We find that outside directorships have a dual effect, such that a balanced level of dedication to the audit committee (roughly two outside directorships) reduces earnings management. We examine four types of expertise: audit, non-audit accounting, non-accounting financial, and supervisory expertise. We find a negative relation between earnings management and the audit experience of committee members, and that the other types of expertise play no relevant role. We also find that the contribution of audit experts to curbing earnings management proves particularly important in smaller and less active committees, as well as in smaller and busier boards.
Open Access
Corporate social responsibility and its effect on earnings management: an empirical research on Spanish firms
(Taylor & Francis Group, 2021-08-29) Santos Jaén, José Manuel; Palacios Manzano, Mercedes; Gras Gil, Ester; Economía Financiera y Contabilidad
The ethics of financial reporting assumes a centre stage in the corporate world in the background of an emerging understanding of Corporate Social Responsibility (CSR). The purpose of this paper is to investigate whether the CSR orientation of a firm affects its reporting incentives, in terms of the accrual-based earnings management. The main argument is that CSR induces transparency and reduces the propensity towards the number of opportunities for earnings management. Using archival data from a panel sample of 100 most reputable Spanish firms between 2011 and 2015, we find a negative impact of CSR practices on earnings management. The findings demonstrate the socially responsible firms are inclined to foster long–term relationships with stakeholders rather than maximise their short-term profit. In this regard, providing quality earnings is closely connected to CSR activities, especially in that both aim to meet the needs of the stakeholders. Our findings have important implications for shareholders, investors and analysts who may consider CSR as an expression of ‘ethical’ investing and a possible reflection of the quality of financial reporting. These groups should be very cautious in relying on CSR information for Spanish firm's analysis, since CSR is found to have significant impact on earnings management.
Open Access
Defence Contracting and Accrual-Based Earnings Management
(2026-02-11) Callado Muñoz, Francisco José; Sánchez Ballesta, Juan Pedro; Utrero-González, Natalia; Yagüe, José; Economía Financiera y Contabilidad; Organización de Empresas y Finanzas
We examine accrual-based earnings management in Spanish defence firms in 2011–2020, using a unique database from the Spanish Ministry of Defence. We find higher levels of accrual-based earnings management and lower accrual quality in firms where defence contracts represent a high proportion of their total sales. Defence contractors manage earnings upwards under financial constraints and downwards when profitability is high. These findings suggest that defence firms may strategically manage earnings to enhance financial image or reduce visibility. Distinguishing among current defence suppliers, potential suppliers, and nondefence firms, we show that earnings management occurs specifically in years with defence sales.
Open Access
Do auditors mitigate earnings manageme nt during economic crisis?
(2019) Reguera Alvarado, Nuria; Fuentes, Pilar de; Laffarga, Joaquina
This paper addresses earnings management from an international perspective. This study particularly ana-lyzes whether external auditing reduces earnings managements and, if so, whether this relationship isaffected by the economic crisis. The study employs a cross-country approach. The sample has 3,830 obser-vations from listed firms from the United States, the United Kingdom, Japan, Italy, France and Spain duringthe period 2005–2009. Panel data are used to verify the research hypotheses. The findings show that ex-ternal auditing is an important mechanism to minimize earnings management. In this sense, the Big Fourand auditor specialization helped to reduce earnings managements during the economic crisis. Moreover,long audit tenure does not contribute to mitigating discretionary accruals. The study includes implicationsfor academia, practitioners, and policymakers. It provides the literature with complementary evidence onthe external auditing and earnings management relationship and how this is influenced by the economiccrisis. The article benefits practitioners and policymakers by highlighting the most important character-istics of audit firms related to the mitigation of earnings managements. In addition, this study considersthe recent economic crisis as an important economic factor. Given that the crisis affected most countriesaround the world and caused structural changes within companies, information about the consequences ofthe crisis and how to deal with them is an important empirical question.
Open Access
Does corporate social responsibility affect earnings management? Evidence from family firms
(2019) López-González, Eva; Martínez-Ferrero, Jennifer; García-Meca, Emma
The purpose of this paper is to shed light on the effect of corporate social responsibility performance on earnings management. We also examine the moderating role of family ownership on the association between earnings management and socially responsible performance. Based on an international sample of 6,442 firm-year observations from 2006 to 2014, we use several panel-data regression models. We find that social and environmental performance is positively related with earnings management; firms with a greater socially responsible performance show a higher discretionary behavior by promoting actions that mask the real financial and economic performance of the firm. However, we find that this positive relation is lower – moderated - in family-owned firms, mainly because of the fact that family firms show a greater socially responsible behavior aimed to preserve their socioemotional endowments and are negatively associated with earnings management practices.
Open Access
Earnings management and European Regulation 1606/2002: Evidence from non-financial Portuguese companies listed in Euronext
(2017) Pereira, Agostinho; Gaspar Alves, Maria do Céu
Antecedentes: Desde 2005, las sociedades portuguesas que cotizan en bolsa han experimentado un impor- tante cambio institucional: la adopción obligatoria de nuevas normas contables (IAS/IFRS). El Reglamento 1606/2002 de la Unión Europea establece que el cumplimiento de las nuevas normas es obligatorio para las cuentas consolidadas de las empresas con valores que cotizan en un mercado regulado. La bibliografía existente evidencia que las normas contables y las características específicas de cada país afectan al nivel de manipulación contable. Objetivos: Por tanto, el propósito de este artículo es analizar cómo las normas de contabilidad y la adopción obligatoria de las IFRS afectan a la manipulación contable en las empresas portuguesas que cotizan en bolsa. Métodos: Para ello, se analiza la evidencia de la manipulación contable, medida a través de devengos discrecionales, tras la adopción de las IAS/IFRS por empresas no financieras que cotizan en Euronext deLisboa en el período 2005-2015. El modelo econométrico de Dechow et al. (2003) y los resultados empíri- cos obtenidos indican que las empresas no financieras que cotizaban en la bolsa de valores portuguesa en el período 2005-2015 mostraban evidencia de devengos discrecionales como indicador de manipulación contable. Resultados: Por tanto, los resultados muestran que después de la adopción de las IAS/IFRS todavía hay indicios de manipulación contable en las empresas no financieras que cotizan en bolsa. Conclusiones: Esta investigación logrará 2 contribuciones distintas: en primer lugar, cubrir una brecha a nivel nacional, dado que no existe ningún estudio que considere el período analizado, y segundo, permitir el enriquecimiento de la bibliografía sobre este tema, ya que muestra que en un país de Europa continental, después de la adopción obligatoria de las normas internacionales, continúan existiendo prácticas de manipulación contable.
Open Access
Executive stock options and earnings management in the Portuguese listed companies
(2012) Alves, Sandra
Theoretically, executive stock options align managers’ and shareholders’ interests. However, previous studies have indicated that stock options may engender manager-shareholder conflicts (Jensen, 2005) and create incentives for earnings management (e.g. Jensen, Murphy and Wruck, 2004; Burns and Kedia, 2006; Efendi, Srivastava and Swanson, 2007). Therefore, this paper examines the implications of stock option grants on earnings management. In particular, we address the following question: Does stock options grant induce incentives for earnings management? Using a sample of 33 non-financial listed Portuguese firms-year from 2003 to 2010, we find that managers are more likely to engage in earnings management when they hold stock options. This study suggests that stock options may not always be effective in aligning the interests of managers and shareholders. Rather, executive stock options seem to affect the informational quality of earnings negatively, and consequently reduce the quality and value relevance of published financial data.
Open Access
La hipótesis de la utilización del Impuesto sobre Beneficios para evitar pérdidas y descensos en resultados
(2007) Parte Esteban, Laura; Gonzalo Angulo, María del Carmen; Gonzalo Angulo, José Antonio
En este trabajo, centrado en la gestión del resultado en empresas españolas cotizadas, comprobamos en primer lugar, la existencia de una discontinuidad en el punto cero en las funciones de densidad del resultado antes de impuesto y neto. En segundo lugar, investigamos el efecto que el reconocimiento del gasto por impuesto sobre beneficios genera en las distribuciones de los resultados. Beaver, McNichols y Nelson (2007) argumentan que la discontinuidad observada en los histogramas de frecuencias puede no ser producto de una gestión intencionada por parte de los administradores sino que puede deberse al efecto asimétrico que juegan dos partidas concretas: el impuesto sobre beneficios y las partidas especiales (por el diferente reconocimiento de los ingresos y gastos, motivado por el sesgo conservador del principio de prudencia). Los resultados encontrados en la muestra española sostienen la hipótesis de Beaver, McNichols y Nelson (2007) para el primer periodo estudiado 1996-2000 y respalda la idea de que la discontinuidad en los puntos clave de los valores del resultado puede ser explicado por la lógica inherente al propio modelo contable, y en especial por el principio de prudencia valorativa, que tiene prevalencia sobre los demás en España, para este periodo considerado. No obstante, esta hipótesis se relaja a partir del ejercicio 2001, coincidiendo con la aprobación de Ley 24/2001
Open Access
El impacto de la crisis en la manipulación contable
(2011) Callao Gastón, Susana; Jarne Jarne, José Ignacio
Basándonos en los grupos cotizados en el mercado español, el presente trabajo aporta evidencia empírica sobre el impacto de la crisis en las prácticas de earnings management. Utilizamos los ajustes por devengo discrecionales como medida de manipulación. Los resultados obtenidos constatan que la calidad de la información financiera se ve afectada en periodos de crisis, ya que ponen de manifiesto que la manipulación al alza del resultado vía ajustes por devengo discrecionales se ha visto incrementada ante las dificultades económicas y financieras. Esto es debido no a la crisis en sí misma, sino a que la crisis ha reforzado la importancia de algunos incentivos para manipular, como es el endeudamiento
Open Access
¿Influye la calidad de la auditoría en la gestión de resultados en los mercados emergentes? Evidencia de Jordania
(2020) Almarayeh, Taha Suleiman; Aibar-Guzmán, Beatriz; Abdullatif, Modar
Este estudio investiga si algunos atributos de la calidad de auditoría son capaces de restringir la manipu-lación de resultados en un país en desarrollo, Jordania, cuyo contexto cultural, económico e institucionales muy diferente del contexto de los países analizados anteriormente. Se usó la regresión de mínimoscuadrados generalizada (GLS) para estudiar la asociación entre dos atributos de la calidad de auditoría(tamaño del auditor y honorarios de auditoría) y los ajustes por devengos discrecionales, como proxy dela manipulación de resultados, para una muestra de empresas industriales que cotizan en la Bolsa devalores de Amman durante el período 2012 - 2016. Los resultados son consistentes con la expectativade que en los países emergentes la auditoría externa puede funcionar de manera diferente a la de lospaíses anglosajones y de Europa occidental con respecto a su papel en la restricción de la manipulación deresultados e indican que, dado el entorno institucional en Jordania, el tamaño del auditor y los honorariosde auditoría no tienen un efecto significativo en la manipulación de resultados. Este estudio proporciona alos lectores información sobre si y cómo el entorno institucional influye en la relación entre la calidad dela auditoría y la manipulación de resultados. Además, presenta nueva evidencia sobre el efecto moderadordel nivel de los honorarios de auditoría en su relación con la manipulación de resultados. Los resultadosde este estudio podrían proporcionar información valiosa a los reguladores, tanto en Jordania como enotros países con un entorno económico e institucional similar, para prevenir las prácticas de manipulaciónde resultados.
Open Access
Is earnings management impacted by audit fees and auditor tenure? An analysis of the Big Four audit firms in the US market
(2023) Martin De Almagro Vazquez, Gema; Valls Martínez, María del Carmen; Santos Jaén, José Manuel; Economía Financiera y Contabilidad
Research background: Audits are intended to ensure the reliability of financial statements, as this is fundamental for different stakeholders. However, both auditor tenure and audit fees could affect the earnings management of companies. In 2014, the European Union established a mandatory audit firm rotation policy. In the United States, although there is still no manda-tory regulation in this regard, there has been a large public debate over the advisability of this policy. Another unresolved controversy is whether audit fees determine audit quality. Purpose of the article: The aim of this research is to study the effect of auditor tenure and audit fees on earnings management, i.e., to determine whether a longer-term relationship between the auditor and the audited company, as well as higher audit fees, reduce the audited company's earnings management, thereby making the financial statements more reliable for stakeholders and increasing the quality of the audit report. In addition, the Big Four auditing companies in the United States were analyzed in order to determine the influence of corporate culture. Methods: A sample of companies listed in the S&P 500 stock market index was employed for the analysis, covering the years 2012 to 2021, resulting in a dataset comprising 3,010 observations. To examine the research hypotheses while mitigating the potential bias from omitted variables, a linear regression analysis was conducted using panel data with fixed effects regression. To enhance the robustness of the results, winsorized variables were also employed. Findings & value added: Overall, the results confirm that the quality of financial statements improves as auditor tenure increases, and so implementing a mandatory auditor rotation may not be in a company’s best interests. The results also support the market segmentation theory, as higher audit fees are aligned with higher quality financial reporting. Furthermore, by analyzing the Big Four audit companies in the US, it is shown that the influence of audit fees and auditor tenure on earnings management also depends on the internal aspects of the particular audit firm, especially its ethical culture. In sum, US policymakers should neither set limits on audit fees nor enforce a mandatory audit firm rotation similar to that of the EU.
Open Access
Modelos de gestión de resultados: un estudio transnacional
(2015) Reguera Alvarado, Nuria; Laffarga Briones, Joaquina; Fuentes Ruiz, Pilar de
La información contable se concibe como el pilar fundamental para la toma de decisiones de los agentes de la empresa. Así pues, dicha información debe cumplir una serie de requisitos que aseguren la calidad de la misma, de tal forma que no introduzca sesgos. De este modo, en los últimos años ha adquirido gran relevancia el desarrollo de modelos y la implantación de medidas encaminadas a reducir los comportamientos oportunistas de los directivos. Así pues, a partir de los modelos desarrollados en la literatura para cuantificar la discrecionalidad contable, el objetivo de este trabajo es determinar si alguno de estos modelos ofrece mejores resultados en cuanto a la cuantificación de la gestión del resultado a partir de las pruebas de especificación y potencia. Para ello se ha utilizado una muestra de 33.410 observaciones correspondientes a empresas no financieras de Estados Unidos, Canadá, Reino Unido, Corea, Japón, Italia, Alemania, Francia, España, Canadá y Australia que han cotizado en mercados de valores a lo largo del periodo 2005-2009. Los resultados ponen de manifiesto la superioridad del modelo de Jones ajustado al ROA con respecto al modelo de Jones y al modelo de Jones modificado.
Open Access
Percepciones sobre la Manipulación del Beneficio. Estudio sobre los Efectos del País de Origen en Estudiantes Universitarios
(2005) Geiger, Marshall A.; Ochoa Laburu, Elena
El objetivo de este trabajo es examinar la influencia del país de origen en la percepción de las prácticas de manipulación de los beneficios. La manipulación de beneficios tiene una variedad de formas que a su vez varían entre diferentes países Estudios anteriores realizados en este ámbito, revelan una gran diversidad de las percepciones sobre la aceptabilidad desde el punto de vista ético de algunas de ellas. Con esta finalidad hemos realizado un estudio donde estudiantes de contabilidad, es decir, futuros profesionales de Estados Unidos y España evalúan un conjunto de situaciones (Merchant and Rockness 1994). El análisis de las respuestas muestra diferencias en las respuestas obtenidas en los dos países, pudiendo indicar que la cultura nacional ejerce su influencia en la percepción de los individuos sobre la manipulación de beneficios
Open Access
Real economic activity and accounting information in Spanish construction and real estate firms
(2016) Navarro-García, Juan Carlos; Madrid-Guijarro, Antonia
The aim of this work is to determine whether the accounting information provided by construction and real estate firms in Spain reflects the real economic activity, during upswings and downturns. A relationship is found between economic conditions and financial reporting in a continental European country such as Spain. Although there is a relationship between real housing price growth and financial accounting measures, real estate companies seem to show an artificial position, since they only present relationship with Return on Assets (ROA) based on low quality income (accruals). Therefore, a different financial position influences a different behaviour in these two similar sectors. In fact, some signs alerting of possible risk in real estate firms are shown.
Open Access
Responsabilidad social corporativa vs. responsabilidad contable
(2013) Martínez-Ferrero, Jennifer; Prado-Lorenzo, José Manuel; Fernández-Fernández, José Miguel
El objetivo de este trabajo es analizar si las empresas socialmente responsables muestran tendencia al uso de mejores prácticas contables, identificadas estas mediante una menor tendencia a la manipulación de resultados. Esta relación es contrastada para una muestra no-balanceada de 1.960 compañías multinacionales, no financieras y cotizadas, pertenecientes a 26 países para el período 2002-2010. La utilización en el análisis de datos de panel, mediante la aplicación del estimador método generalizador de momentos de Arellano y Bond (1991), permite evidenciar la existencia de una relación negativa entre ambas variables. Los resultados obtenidos son robustos para distintas medidas de la manipulación contable y la responsabilidad social corporativa.
Open Access
Social capital and earnings management in small and medium firms
(2021-07-01) Sánchez Ballesta, Juan Pedro; Yagüe, José; Organización de Empresas y Finanzas; Facultades, Departamentos, Servicios y Escuelas::Departamentos de la UMU::Organización de Empresas y Finanzas
In this study we examine the association between social capital and earnings management in small and medium firms (SMEs). Social capital, i.e. the community’s norms and networks, may play a role as an informal and external disciplining mechanism of managers and, therefore, affect earnings management practises in small and medium firms, less subject to formal internal and external monitoring than larger firms. We implement a cross-region analysis by using a sample of Spanish SMEs and employ three measures that consider sociological and economic dimensions of social capital: an index of social capital based on economic relationships and proxies for trust and civic engagement. We find a negative association between the proxies for social capital and earnings management. Hence, our findings suggest that managers of small and medium firms headquartered in regions of higher social capital are less likely to manage reported earnings. However, our findings also reveal that the relationship between social capital and earnings management practises in private SMEs depends on firm size.
Open Access
The Effect of Corporate Social Responsibility on Earnings Management: Bibliometric Review
(MDPI, 2021-12-07) León-Gómez, Ana; Santos Jaén, José Manuel; Serrano Madrid, José; Economía Financiera y Contabilidad
This review aims to study the knowledge development and research dissemination on the influence of Corporate Social Responsibility (CSR) on earnings management through a social network approach using a bibliometric review. A systematic bibliometric review was carried out on 329 papers obtained from the Clarivate Analytics Web of Science (WoS) Core Collection database. The data were analyzed by year, journal, author, institution, country, affiliation, subject area and term analysis. The results reveal the growing interest of researchers in studying the impact of CSR. Although the USA and China dominate publication production, there are a large number of authors from more than 50 countries around the world. The results also show that being prolific does not imply being influential in this area. The keyword patterns showed some interesting potential areas of study on this topic. The findings of this paper provide insight to the research on the analysis of the influence of CSR on earnings management. The most important findings consist of a number of gaps in the literature, such as gender diversity, voluntary disclosure of information and existence of an audit committee, among others, that allow for future fields of research to improve the analysis of the influence of CSR in EM. This research should also prove helpful to managers, owners and auditors. This is the first bibliometric review developed on this topic and it can be extrapolated to any place in the world.

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