Does the quarterly accrual anomaly exist in Taiwan's stock market? Evidence from Manager's earnings management

Abstract

This study investigates the existence of quarterly accrual anomalies in Taiwan's stock market. Our empirical results indicate that the arbitrage portfolios formed by the accounting accruals of the fourth‐quarter financial reports could result in abnormal returns, and thus, inferred that quarterly accrual anomalies exist. We further examined the causes of the accrual anomalies and determined that the manager conduct earnings management behavior during the fourth quarter. Managers execute discretionary accruals for management earnings forecast to meet previously issued financial forecasts, which leads to the fourth‐quarter accrual anomalies. The portfolios formed by using discretionary accruals and management earnings forecasts produce arbitrage portfolios with optimal return.

Nexus between corporate social responsibility and earnings management: Sustainable or opportunistic

“…Active involvement in CSR activities increases stakeholder satisfaction, which further helps the organization to improve its corporate image in the market (Gavana et al, 2017). Thus, managers are involved in EM for their personal benefits (Wang & Ding, 2021) and used CSR to conceal their opportunistic EM behavior and to shield them against the risk of being fired (Moratis & van Egmond, 2018). Therefore, we postulate that: H2.…”