Catalogue Search | MBRL
Are you sure you want to remove the book from the shelf?
{{itemTitle}}
45,886,590
result(s) for
"Earnings"
Sort by:
Allowance for Doubtful Accounts and Earning Management: An Empirical Study of Chinese Listed Companies
This empirical study aims to reveal that companies conduct earnings management by the fuzzy zone of allowance policy. It investigates the interrelationship between the allowance for doubtful accounts and earning management with the use of three hypotheses. The data used are from Chinese listed companies for the period 2008- 2017. The Chinese accounting standards have experienced two major changes and because of that, this study is divided into two parts. After the modification of 2014, the allowance for doubtful accounts and the reversal faced a huge difference comparing with previous rules. The findings prove that before 2014, Chinese listed companies manipulated the earnings with the help of allowance for doubtful accounts. However, afterwards the possibility of earning management deteriorates, showing the effectiveness of the fair value accounting standard improvement. Furthermore, return on equity shows less significant relationship with allowance for doubtful accounts. Although a previous study considers debt contracts enhances the negative relationship with allowance for doubtful accounts, the findings show instead a positive one. This simply means that high leverage ratio creates higher allowance for doubtful accounts.
Journal Article
WHAT DO DATA ON MILLIONS OF U.S. WORKERS REVEAL ABOUT LIFECYCLE EARNINGS DYNAMICS?
We study individual male earnings dynamics over the life cycle using panel data on millions of U.S. workers. Using nonparametric methods, we first show that the distribution of earnings changes exhibits substantial deviations from lognormality, such as negative skewness and very high kurtosis. Further, the extent of these nonnormalities varies significantly with age and earnings level, peaking around age 50 and between the 70th and 90th percentiles of the earnings distribution. Second, we estimate nonparametric impulse response functions and find important asymmetries: Positive changes for high-income individuals are quite transitory, whereas negative ones are very persistent; the opposite is true for low-income individuals. Third, we turn to long-run outcomes and find substantial heterogeneity in the cumulative growth rates of earnings and the total number of years individuals spend nonemployed between ages 25 and 55. Finally, by targeting these rich sets of moments, we estimate stochastic processes for earnings that range from the simple to the complex. Our preferred specification features normal mixture innovations to both persistent and transitory components and includes state-dependent long-term nonemployment shocks with a realization probability that varies with age and earnings.
Journal Article
Commemorating the 50-Year Anniversary of Ball and Brown (1968): The Evolution of Capital Market Research over the Past 50 Years
We commemorate the 50th anniversary of Ball and Brown [1968] by chronicling its impact on capital market research in accounting. We trace the evolution of various research paths that post-Ball and Brown [1968] researchers took as they sought to build on the foundation laid by Ball and Brown [1968] to create a body of research on the usefulness, timeliness, and other properties of accounting numbers. We discuss how those paths often link back to the groundwork laid and questions originally posed in Ball and Brown [1968].
Journal Article
Meet, beat, and pollute
We investigate two related questions about the trade-off between the short-term pressures on managers to meet earnings targets and the long-term environmental benefits of reduced pollution. Do firms release more toxins by cutting back on pollution abatement costs to boost earnings in years they meet earnings benchmarks? If so, is that relation weaker for firms with higher environmental ratings? Using Environmental Protection Agency (EPA) data on toxic emissions, we find that U.S. firms pollute more when they meet or just beat consensus earnings per share (EPS) forecasts, suggesting that meeting expectations is a more important goal than reducing pollution. We find this relation is stronger, not weaker, for firms with higher environmental ratings: they increase pollution even more when meeting earnings benchmarks than firms with lower ratings. This suggests that highly rated firms build regulatory and reputational slack over time and use it when needed to soften the negative impact of increased pollution. We contribute to the real earnings management and environmental economics literatures by documenting a negative externality of financial reporting incentives on the environment and society. We also contribute to the corporate sustainability literature by showing that an environmental, social, and governance (ESG) focus does not curb managerial short-termism.
Journal Article
Disentangling Managers' and Analysts' Non-GAAP Reporting
Researchers frequently proxy for managers' non-GAAP disclosures using performance metrics available through analyst forecast data providers (FDPs), such as I/B/E/S. The extent to which FDP-provided earnings are a valid proxy for managers' non-GAAP reporting, however, has been debated extensively. We explore this important question by creating the first large-sample data set of managers' non-GAAP earnings disclosures, which we directly compare to I/B/E/S data. Although we find a substantial overlap between the two data sets, we also find that they differ in systematic ways because I/B/E/S (1) excludes managers' lower quality non-GAAP numbers and (2) sometimes provides higher quality non-GAAP measures that managers do not explicitly disclose. Our results indicate that using I/B/E/S to identify managers' non-GAAP disclosures significantly underestimates the aggressiveness of their reporting choices. We encourage researchers interested in managers' non-GAAP reporting to use our newly available data set of manager-disclosed non-GAAP metrics because it more accurately captures managers' reporting choices.
Journal Article
Evidence on the Trade-Off between Real Activities Manipulation and Accrual-Based Earnings Management
I study whether managers use real activities manipulation and accrual-based earnings management as substitutes in managing earnings. I find that managers trade off the two earnings management methods based on their relative costs and that managers adjust the level of accrual-based earnings management according to the level of real activities manipulation realized. Using an empirical model that incorporates the costs associated with the two earnings management methods and captures managers' sequential decisions, I document large-sample evidence consistent with managers using real activities manipulation and accrual-based earnings management as substitutes.
Journal Article
Tone Management
We investigate whether and when firms manage the tone of words in earnings press releases, and how investors react to tone management. We estimate abnormal positive tone, ABTONE, as a measure of tone management from residuals of a tone model that controls for firm quantitative fundamentals such as performance, risk, and complexity. We find that ABTONE predicts negative future earnings and cash flows, is positively associated with upward perception management events, such as, just meeting/beating thresholds, future earnings restatements, SEO, and M&A, and is negatively associated with a downward perception management event, stock option grants. ABTONE has a positive stock return effect at the earnings announcement and a delayed negative reaction in the one and two quarters afterward. Balance sheet constrained firms and older firms are more likely to employ tone management over accruals management. Overall, the evidence is consistent with managers using strategic tone management to mislead investors about firm fundamentals.
Journal Article
Post-Earnings-Announcement Drift and the Return Predictability of Earnings Levels: One Effect or Two?
This paper examines whether earnings levels predict future returns distinct from earnings changes. I find that the predictive ability of earnings levels is subsumed by and is not incremental to the predictive ability of earnings changes. Specifically, I find that trading strategies based on net income, operating profitability, and gross profitability do not earn significant abnormal returns after controlling for earnings changes. My evidence suggests that these anomalies are an artifact of post-earnings-announcement drift and the failure to properly control for earnings changes.
Data are available at
https://doi.org/10.1287/mnsc.2017.2838
.
This paper was accepted by Mary Barth, accounting.
Journal Article