Banks' Earnings Management before Potential Violation of Dividend Regulation in Japan

Kato, Kazuo; Kunimura, Michio; Yoshida, Yasushi

doi:10.2139/ssrn.273945

Cited by 11 publications

(5 citation statements)

References 15 publications

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“…They can show less income and more expenses to fulfill this objective. The study of Edelstein et al (2008) supports the findings of Kato et al (2001) who revealed dividend stirred earnings management, but contradictory with the study of Savov (2006) who found in his study that firms holding more investments have more chances of discretionary accruals in their earnings. These discretionary accruals are the measure of earnings management.…”

Section: Dividend Policy and Earnings Managementmentioning

confidence: 91%

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Dividend Policy and Earnings Management: An Empirical Study of Pakistani Listed Companies

Arif¹,

Khan²,

Kayani³

et al. 2011

IMBR

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Dividend policy is one of the widely addressed topics in financial management. It is an important duty of a financial manager to formulate the company's dividend policy that is in the best interest of the company. Many a time financial managers are involved in earnings management practices with the intention of adjusting dividends. The present study has been carried out to scrutinize the effect of earnings management on dividend policy. The researchers have taken the data of 86 listed companies for the year 2004 to 2009. The researchers have measured the dividend policy by using dividend payout ratio while Modified Cross Sectional Jones Model (1995) has been employed to measure the earnings management. The results of the common effect model show that there is not any significant relationship among earnings management and dividend policy. Moreover, smaller companies are paying more dividends as compared to larger companies. This study reveals that involvement of managers is not for dividend policy. There might be some other motives behind the earnings management.

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Section: Dividend Policy and Earnings Managementmentioning

confidence: 91%

“…Therefore, the companies are encouraged for earnings management to exhibit sufficient income to pay dividend. The study of Kato, Kunimura & Yoshida (2001) found some evidences on the dividend stimulated earnings management. They also divulged the fact that banks manage their earnings to stay on top.…”

Section: Dividend Policy and Earnings Managementmentioning

confidence: 99%

Dividend Policy and Earnings Management: An Empirical Study of Pakistani Listed Companies

Arif¹,

Khan²,

Kayani³

et al. 2011

IMBR

View full text Add to dashboard Cite

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“…Several banking system-related studies, such as that of Kato et al (2001), have compared different models of EM measurement of banks, such as the model of Healy and Wahlen (1999) and that of Ahmed et al (1999), to detect the existence of EM and examine the effect of government policymaking on minimum dividend yields in banks. Moreover, Yasuda et al (2004) studied the most challenging period for the Japanese banking industry, 1990 to 1999, to inspect the bank risk-voluntary accruals relationship using the modified Jones model (Dechow et al, 1995).…”

Section: Literature Reviewmentioning

confidence: 99%

“…Several banking system-related studies, such as that of Kato et al. (2001), have compared different models of EM measurement of banks, such as the model of Healy and Wahlen (1999) and that of Ahmed et al.…”

Section: Literature Reviewmentioning

confidence: 99%

How do Islamic banks manage earnings? Application of various measurement models in the Iranian Islamic banking system

Asl

Doudkanlou

2022

IJIF

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PurposeThis study aimed to identify and compare the measurement models of earnings management (EM) appropriate to the Iranian Islamic banking system. The importance of reported profit figures has motivated business executives, who also perform financial reporting, to manipulate these figures. These measures are referred to as “earnings management,” which negatively influence the quality of reported earnings and financial statements' reliability. The number of resources available to banks and their specific operational sensitivities doubles the importance of EM in this industry.Design/methodology/approachIn this study, four methods, namely, Jones (1991), modified Jones (Dechow et al., 1995), Kasznik (1999) and Kothari et al. (2005), were used to measure the EM index in 25 Iranian Islamic banks (IBs) registered with the Tehran Stock Exchange and/or the Central Bank of Iran. The study covered the period 2005–2020. Following the aforementioned methods, this research implemented templates that were repeatedly tested in subsequent studies using accruals to discover EM.FindingsThe results show that the Kasznik (1999) model is the preferred and compatible model with the Iranian Islamic banking system's accrual behaviour due to the consistency of the measurement coefficients with theoretical and previous research findings. Therefore, total accruals, including discretionary accruals and non-discretionary accruals, have the most correspondence with (1) property, machinery and equipment; (2) the change in cash flow from operating activities; and (3) the difference of change in revenue (ΔREV) and change in net receivable accounts (ΔREC).Originality/valueThis is the first investigation in the Iranian Islamic banking system. The research contributes to the Iranian Islamic banking system literature on the implements of EM, which could be appealed to in the context of developing countries like Iran. Finally, this study highlights the different EM capabilities in Islamic banking systems similar to the Iranian banking arrangement.

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“…In fact, we suspect that HMOs in financial distress manipulate their accounting information in order to introduce noise and mislead the process conducted by the ANS to evaluate their solvency status. Also, earnings management literature, which uses discretionary accruals as a proxy for manipulation, has shown that banks (Kato, Kunimura, & Yoshida, ), HMOs (Mensah, Considine, & Oakes, ) and producers in general (Jones, ; Navissi, ) manipulate their accounting information in order to mislead regulators. The originality of this work is that, differently from previous studies, it is not based on any discretionary accruals models.…”

Section: Introductionmentioning

confidence: 99%

Insolvency Prediction in the Presence of Data Inconsistencies

Mendes

Cardoso

Mário

et al. 2014

Intell. Sys. Acc. Fin. Mgmt.

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SUMMARY In this paper we use data inconsistencies as an indicator of financial distress. Traditional models for insolvency prediction normally ignore inconsistent data, either by removing or replacing it. Instead of removing that information, we propose a new variable to capture it; using it together with traditional accounting variables (based on financial ratios) for the purpose of insolvency prediction. Computational tests use three datasets based on the financial results of 2033 Brazilian Health Maintenance Organizations over 7 years (2001 to 2007). Sixteen classification methods were used to evaluate whether or not the new variable impacted solvency prediction. Tests show a statistically significant improvement in classification accuracy – average results improve 1.3 (p = 0.003) and 1.8 (p = 0.006) percentage points, for 10‐fold and leave‐one‐out cross‐validations respectively. In addition, the analysis of false positives and false negatives shows that the new variable reduces the potentially harmful misclassification of false negatives (i.e. financially distressed companies being classified as financially healthy) and also reduces the estimated overall error rate. Regarding the extensibility of the results, even though this work uses data from Brazilian companies only, the calculation of the financial ratios variables, as well as the inconsistencies, could be extended to most companies worldwide subject to governmental accounting regulations aligned with the International Financial Reporting Standards. Copyright © 2014 John Wiley & Sons, Ltd.

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Banks' Earnings Management before Potential Violation of Dividend Regulation in Japan

Cited by 11 publications

References 15 publications

Dividend Policy and Earnings Management: An Empirical Study of Pakistani Listed Companies

Dividend Policy and Earnings Management: An Empirical Study of Pakistani Listed Companies

How do Islamic banks manage earnings? Application of various measurement models in the Iranian Islamic banking system

Insolvency Prediction in the Presence of Data Inconsistencies

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