Detecting Earnings Management: A New Approach

Dechow, Patricia M.; Hutton, Amy P.; Ecker, Frank; Francis, Jennifer; Gerakos, Joseph; McNichols, Maureen F.; Olsson, Per; Schipper, Katherine

doi:10.2139/ssrn.1735168

Cited by 443 publications

(818 citation statements)

References 18 publications

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“…The first models known for identification of EM through discretionary accruals (accrual total -accruals non-discretionary) are DeAngelo (1986) and Healy (1985), which might explain the prominence of positivist theory (Watts & Zimmerman, 1986) during this period. However, it was in the 90s that EM studies of with this approach proliferated, highlighting the models proposed by Jones (1991); Dechow, Sloan, and Sweeney (1995), known as Jones (1991) modified;and Kang and Sivaramakrishnan (1995). Since the proposition of these models, several studies have adopted them to identify EM practices and/or motivational factors associated to them in, different countries or groups of countries, especially: (i) Jones (1991) Kang and Sivaramakrishnan (1995) model -e.g.…”

Section: Mcnicholsmentioning

confidence: 99%

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Earnings management and economic crises in the brazilian capital market

et al. 2014

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The 2008 economic crisis challenged accounting, either demanding recognition and measurement criteria well adjusted to this scenario or even questioning its ability to inform appropriately entities' financial situation before the crisis occurred. So, our purpose was to verify if during economic crises listed companies in the Brazilian capital market tended to adopt earnings management (EM) practices. Our sample consisted in 3,772 firm-years observations, in 13 years -1997 to 2009. We developed regression models considering discretionary accruals as EM proxy (dependent variable), crisis as a macroeconomic factor (dummy variable of interest), ROA, market-to-book, size, leverage, foreign direct investment (FDI) and sector as control variables. Different for previous EM studies two approaches were used in data panel regression models and multiple crises were observed simultaneously. Statistics tests revealed a significant relation between economic crisis and EM practices concerning listed companies in Brazil in both approaches used. KEY WORDS | RAE-Revista de Administração de Empresas | FGV-EAESP

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Section: Mcnicholsmentioning

confidence: 99%

“…McNichols (2000); Kothari, Leone, and Wasley (2005). Several also the proposed modifications to these models, mostly with the inclusion of variables in the model originally proposed by Jones (1991) and modified by Dechow, Sloan, and Sweeney (1995).…”

Section: Mcnicholsmentioning

confidence: 99%

Earnings management and economic crises in the brazilian capital market

et al. 2014

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“…Kothari model (Kothari et al, 2005) Following Jones (1991) and Dechow et al (1995), total accrual adjustments (TAA) are defined as:…”

Section: Appendix 1 Measure Of Earnings Management Through Discretionmentioning

confidence: 99%

Consequences of financial reporting quality on corporate performance: Evidence at the international level

Martínez‐Ferrero

2014

Estudios de Economía

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This paper examines the consequences of Financial Reporting Quality (FRQ) on Corporate Performance, using three proxies of FRQ: (i) earnings quality;(ii) conservatism; and (iii) JEL Classification: M41 Resumen Este trabajo examina las consecuencias de la Calidad de Información Financiera (FRQ) en el desempeño empresarial, con tres alternativas de FRQ: (i) earnings quality, (ii) conservadurismo, y (iii) accruals quality. Nuestro objetivo es analizar el efecto de la FRQ en el rendimiento financiero (FP) medido por el valor de mercado. A tal efecto, las hipótesis propuestas son testadas para

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“…Pressupõe-se que o desempenho da empresa quando medido pelo indicador ROA está positivamente relacionado ao gerenciamento de resultados (Dechow, Sloan & Sweeney, 1995), pois empresas com melhores retornos sobre seus ativos possuem menores níveis de gerenciamento de resultados (Burgstahler, Hail & Leuz, 2006), assim como também aquelas que possuem melhores retornos sobre o patrimônio líquido. Diante disso, espera-se verificar o mesmo comportamento para o desempenho em relação ao gerenciamento de resultados por meio da conta de provisão para garantias.…”

Section: Aspectos Metodológicos Do Estudounclassified

“…Existem diversos modelos de gerenciamento de resultados com estimação dos accruals discricionários, como, por exemplo, Healy (1985), Jones (1991), Jones Modificado (Dechow et al, 1995), KS (Kang & Sivaramakrishnan, 1995) e Pae (2005) (Melo & Paulo, 2011). Porém, existem também outras abordagens para analisar o comportamento discricionário dos accruals, como, por exemplo, a análise de accruals específicos (Martinez, 2001).…”

Section: Introductionunclassified