Earnings quality and earnings management: the role of accounting accruals
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| Main Author: | |
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| Format: | Book |
| Language: | English |
| Published: |
Saarbrücken
VDM-Verl. Müller
2008
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| Online Access: | Inhaltsverzeichnis |
| Item Description: | Literaturverz. S. 181 - 193 |
| Physical Description: | 199 S. graph. Darst. |
| ISBN: | 9783639055443 |
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| 100 | 1 | |a Bissessur, Sanjay |e Verfasser |4 aut | |
| 245 | 1 | 0 | |a Earnings quality and earnings management |b the role of accounting accruals |c Sanjay Bissessur |
| 264 | 1 | |a Saarbrücken |b VDM-Verl. Müller |c 2008 | |
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| 500 | |a Literaturverz. S. 181 - 193 | ||
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| adam_text | Titel: Earnings quality and earnings management
Autor: Bissessur, Sanjay
Jahr: 2008
Contents
Chapter 1 Introduction 1
1.1 Introduction 1
1.2 Research objectives and contributions 2
1.3 Outline of the monologue 7
Chapter 2 The role of accruals and cash flows in financial reporting 9
2.1 Introduction 9
2.2 The accrual process modeled 9
2.3 The noise reducing role of accruals 16
2.4 The information content of cash flows and accruals 18
2.6 Summary and implications for this study 24
Chapter 3 Accruals and Conservatism 25
3.1 Introduction 25
3.2 Timely loss recognition, Conservatism and Accruals 26
3.3 Measuring of accounting conservatism 31
3.3.1 Net asset measures 32
3.3.2 Earnings/ Stock return relations 32
3.3.3 Earnings measures 33
3.3.4 Accrual Measures 34
3.4 Summary and implications for this study 36
Chapter 4 Accruals and Earnings Quality 39
4.1 Introduction 39
4.2 Measuring Earnings Oualiry 39
4.3 Earnings Persistence 41
4.3 Summary and implications for this studv 51
Chapter 5 Detecting F.arnings Management: A review 53
5.1 Introduction 53
5.2 Defining Earnings Management 54
5.3 Earnings Management Research Designs 57
5.3.1 Aggregate accrual models 58
5.3.2 Specific accruals 65
5.3.3 Distribution of earnings approach 69
5.3.4 Other approaches to detecting earnings management. 72
5.4 Summary and implications for this study 74
Chapter 6 Accrual Quality, Cash Flow Persistence and the Prediction of Future
Cash Flows_________________________________________________________75
6.1 Introduction_____________________________________________________75
6.2 Hypothesis Development____________________________________________79
6.3 Research Methodology _____________________________________________83
6.4 Results_________________________________________________________88
6.4.1 Descriptive statistics___________________________________________________________88
6.4.2 Test of H6.1: There is a positive association between accrual quality and the persistence of cash
flows and the incremental relevance of cash flow to accruals_______________________________91
6.4.3 Test of H6.2: The incremental relevance of abnormal accruals for the prediction of future cash
flows incremental to current cash flow is not related to accrual quality_______________________94
6.4.4 Test of H6.3: The level of net operating assets (NOA) is informative for the prediction of future
cash flow dependent on the level of accrual quality _____________________________________100
6.5 Robustness Tests_______________________________________________________________104
6.5.1 The Dechow and Dichev (2002) measure of Accrual Quality_________________________104
6.5.2 Tests of different accrual quality measures_________________________________________107
6.5.3 Definition of Total Accruals____________________________________________________109
6.5.4 Definition of net operating assets_______________________________________________ 111
6.5.5 is accrual quality related to future cash flows?_____________________________________111
6.6 Summary and Conclusion_______________________________________________________113
Chapter 7 Growth and the role of Accounting Accruals____________________ 115
7.1 Introduction____________________________________________________________________115
7.2 Hypothesis Development ___________________________________________________117
7.3 Research Methodology_________________________________________________________120
7.4 Results________________________________________________________________________123
7.4.1 Descriptive Statistics___________________________________________________ 123
7.4.2 Test of H7.1: The noise reducing role of accruals is less prevalent for growth firms, and more
prevalent for value firms____________________________________________________________126
7.4.3 Test of H7.2: The difference in accounting perspective for growth firms versus value firms
causes a bias in accrual based measures for earnings management__________________________128
7.5 Robustness tests__________________________________________________________132
7.5.1. Specification of robustness tests________________________________________________132
7.5.2. Different definitions of accruals 132
7.5.3. Size_______________________ 135
7.5.4 Fiscal year-end_____________________________________________________________ 136
7.5.5 Controls for industry 137
7.6 Summary and Conclusion_______________________________________________________140
Chapter 8 Differences in the Role of Accruals for Conditional Conservatism
between Profit firms and Loss firms___________________________________ 141
8.1 Introduction__________________________________________________________141
8.2 Hypothesis development________________________________________________145
8.3 Research Methodology _________________________________________________150
8.4 Results______________________________________________________________153
8.4.1 Descriptive Statistics_________________________________________________________153
8.4.2 Test of H8.1: Accruals are used by accounting loss firms for conditional conservatism. In
contrast, profit firms do not use accruals for conditional conservatism______________________154
8.4.3 Test of H8.2: The difference in the role of accruals for timely loss recognition between profit
firms and loss firms is caused by the use of special items________________________________ 158
8.5 Robustness tests______________________________________________________________160
8.5.1 Differential mean reversion in earnings changes__________________________________160
8.5.2 Accruals estimated from the balance sheet_______________________________________162
8.5.3 Fama-Macbeth statistics______________________________________________________163
8.5.4 Controls for Industry_________________________________________________________164
8.5.5 Different proxy for economic loss ______________________________________________ 167
8.6 Summary and Conclusion______________________________________________________167
Chapter 9 Summary and Discussion_______________________________________ 171
9.1 Introduction__________________________________________________________171
9.2 The theoretical foundation of the monologue________________________________171
9.3 Empirical Research ____________________________________________________174
9.4 Limitations, suggestions for future research and implications____________________177
References________________________________________________________ 181
Appendix A____________________________________________________________195S
Figures
Figure 5.1 Management discretion over accounting choices......................................................................563
Figure 5.2 Distribution of annual net income, taken from Burgstahler and Dichev (1997).......................706
Figure 8.1 Grouping of firms with accounting profits and accounting losses....................................147
Tables
Table 6.1 Descriptive statistics and correlations for the initial firm characteristics and accrual
characteristics......................................................................................................................................86
Table 6.2 Correlation matrix of Cash flow and Accrual Measures- Pearson (Spearman) Correlation
Coefficients in the Lower (Upper) Diagonal (p- values shown in parentheses below correlations)... 87
Table 6.3 Time-series means and t-statistics for coefficients from annual cross-sectional regressions of next
year s cash flow from operations on this year s cash flow from operations and net operating assets.
..........................................................................................................................................................929
Table 6.4 Time-series means and t-statistics for coefficients from annual cross-sectional regressions of next
year s cash flow from operations on this year s cash flow from operations and net operating assets.
..........................................................................................................................................................952
Table 6.5 Time-series means and t-statistics for coefficients from annual cross-sectional regressions of next
year s cash flow from operations on this year s cash flow from operations and net operating assets
and accruals.........................................................................................................................................95
Table 6.6 Time-series means and t-statistics for coefficients from annual cross-sectional regressions of next
year s cash flow from operations on this year s cash flow from operations and net operating assets.
.......................................................................................................................................................10198
Table 6.7 Time-series means and t-statistics for coefficients from annual cross-sectional regressions of next
year s cash flow from operations on this year s cash flow from operations and net operating assets.
..........................................................................................................................................................103
Table 6.8 Factor Loadings using Principal Components Method with Varimax Rotations........................108
Table 6.9 Correlation matrix of Accrual Quality measures - Pearson (Spearman) Correlation Coefficients in
the Lower (Upper) Diagonal (p- values shown in parentheses below correlations)..........................109
Table 6.10 Time-series means and t-statistics for coefficients from annual cross-sectional regressions of
next year s cash flow from operations on this year s cash flow from operations and net operating
assets.................................................................................................................................................107
Table 6.11 Time-series means and t-statistics for coefficients from annual cross-sectional regressions of
next year s cash flow from operations on this year s cash flow from operations and net operating
assets.................................................................................................................................................Ill
Table 6.12 Time-series means and t-statistics for coefficients from annual cross-sectional regressions of
Accrual Quality and the AQ score on (different components of) free cash flow............................113
Table 7.1 Descriptive Statistics for Firm-Year Observations.....................................................................124
Table 7.2 Descriptive statistics of the accrual characteristics.....................................................................124
Table 7.3 Differences in means of firm and accrual characteristics between Growth firms and Value firms
..........................................................................................................................................................125
Table 7.4 Correlations between variables- Pearson (Spearman) Correlation Coefficients in the Lower
(Upper) Diagonal (p- values shown in parentheses below correlations)...........................................126
Table 7.5 Time-series means and t-statistics for coefficients from annual cross-sectional regressions of
Current accruals on cash flow from operations.................................................................................127
Table 7.6 Accrual properties and earnings management proxies for growth firms versus value firms......129
Table 7.7 Logistic Regressions of Life Cycle on Unexpected Specific Accruals......................................131
Table 7.8 Time-series means and t-statistics for coefficients from annual cross-sectional regressions of
current accruals on cash flow from operations..................................................................................135
Table 7.9 Time-series means and t-statistics for coefficients from annual cross-sectional regressions of
Current accruals on cash flow from operations with controls for growth......................................... 136
Table 7.10 Time-series means and t-statistics for coefficients from annual cross-sectional regressions of
Current accruals on cash flow from operations with December fiscal year-end...............................137
Table 7.11 Industry subsample................................................................................................................... I3S
Table 7.12 Time-series means and t-statistics for coefficients from annual cross-sectional regressions of
Current accruals on cash flow form operations................................................................................. 139
Table 8.1 Descriptive Statistics for Firm-Year Observations..................................................................... 154
Table 8.2 Correlations of variables- Pearson (Spearman) Correlation Coefficients in the Lower (Upper)
Diagonal (p- values shown in parentheses below correlations)........................................................ 154
Table 8.3 Coeffients and t-statistics for coefficients from regressions of Total Accruals on Cash Flow from
Operations. The proxy for an economic loss is hCFO, 0............................................................... 156
Table 8.4 Coeffients and I statistics for coefficients from regressions of Total Accruals on Cash Flow from
Operations. The proxy for an economic loss is CFO, 0...............................................................157
Table 8.5 Descriptive Statistics of Special Items, conditional on accounting and economic profits or losses
..........................................................................................................................................................158
Table 8.6 Coefficients and t-statistics from regressions of Special items on Cash Flow from Operations.
The proxy for an economic loss is CFO, 0..................................................................................... 159
Table 8.7 Coeffients and t-statistics for coefficients from regressions of change in Earnings on lagged
change in Earnings. The proxy for an economic loss is AAV, 0...................................................... 161
Table 8.8 Coeffients and t-statistics for coefficients from regressions of Total Accruals from the balance
sheet on Cash Flow from Operations. The proxy for an economic loss is ACFO, 0..................... 163
Table 8.9 Time series means and t-statistics for coefficients from annual regressions of Total Accruals on
Cash Flow from Operations. The proxy for an economic loss is ACFO, 0....................................164
Table 8.10 Industry subsample...................................................................................................................165
Table 8.11 Coefficients and t-statistics from pooled regressions of Total accruals on cash flow form
operations by industry....................................................................................................................... 166
Table 8.12 Coeffients and t-statistics for coefficients from regressions of Total Accruals on Cash Flow
from Operations. The proxy for an economic loss is CFO, 0......................................................... 167
|
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| illustrated | Illustrated |
| indexdate | 2024-07-09T22:36:01Z |
| institution | BVB |
| isbn | 9783639055443 |
| language | English |
| oai_aleph_id | oai:aleph.bib-bvb.de:BVB01-020135850 |
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| physical | 199 S. graph. Darst. |
| publishDate | 2008 |
| publishDateSearch | 2008 |
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| spelling | Bissessur, Sanjay Verfasser aut Earnings quality and earnings management the role of accounting accruals Sanjay Bissessur Saarbrücken VDM-Verl. Müller 2008 199 S. graph. Darst. txt rdacontent n rdamedia nc rdacarrier Literaturverz. S. 181 - 193 HBZ Datenaustausch application/pdf http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=020135850&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA Inhaltsverzeichnis |
| spellingShingle | Bissessur, Sanjay Earnings quality and earnings management the role of accounting accruals |
| title | Earnings quality and earnings management the role of accounting accruals |
| title_auth | Earnings quality and earnings management the role of accounting accruals |
| title_exact_search | Earnings quality and earnings management the role of accounting accruals |
| title_full | Earnings quality and earnings management the role of accounting accruals Sanjay Bissessur |
| title_fullStr | Earnings quality and earnings management the role of accounting accruals Sanjay Bissessur |
| title_full_unstemmed | Earnings quality and earnings management the role of accounting accruals Sanjay Bissessur |
| title_short | Earnings quality and earnings management |
| title_sort | earnings quality and earnings management the role of accounting accruals |
| title_sub | the role of accounting accruals |
| url | http://bvbr.bib-bvb.de:8991/F?func=service&doc_library=BVB01&local_base=BVB01&doc_number=020135850&sequence=000002&line_number=0001&func_code=DB_RECORDS&service_type=MEDIA |
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