Earnings management, corporate governance and expense stickiness

Xue, Shuang; Hong, Yun

doi:10.1016/j.cjar.2015.02.001

Cited by 73 publications

(83 citation statements)

References 29 publications

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“…They concluded that earnings management has a significant effect on expense stickiness. However, Xue and Hong (2015) found slightly similar evidence when they also conducted a study on earnings management, corporate governance, and sticky cost. They found evidence indicating the presence of sticky cost among the earnings management sub-sample but found a much more significant amount of sticky cost among the non-earnings management sub-sample.…”

Section: Sticky Cost and Real Earnings Managementmentioning

confidence: 76%

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Relationship between Real Earnings Management and Cost Behavior

Boakye

Atiso

Koranteng

2019

SJOM

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Purpose- This research aims to examine the relationship between real earnings management (REM) and sticky Selling General and Administrative (SG&A) costs in the case of a developing economy. Design/Methodology- The study employed a purposive sampling method. Fifteen firms listed on Ghana stock exchange were selected for the study. Data from the period of 2005 to 20014 were collected. Findings- The study finds Ghanaian listed firm's SG&A cost to be sticky and also see these firms to manipulate earnings through REM. This study finds that REM through discretionary expenses and production cost increases sticky SG&A cost, whereas REM through cash flow reduces sticky SG&A cost. Overall, the results imply that REM exhibit sticky cost. Practical Implications- The study informs managers that cost is not only fixed or variable but also behaves asymmetrically. The understanding of this concept could help managers to implement strategies that will lower the cost of doing business. Also, since some managers deliberately make decisions that lead to real earnings management and sticky cost, we, therefore, believe that this research will be of importance to regulatory bodies, policymakers, investors, and other stakeholders.

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Section: Sticky Cost and Real Earnings Managementmentioning

confidence: 76%

“…Prior studies provide strong evidence. For instance, Xue and Hong (2015) found evidence indicating that both earnings management and sticky cost moves in the opposite direction, meaning as earnings management increases sticky cost diminishes. Consequently, the more a firm indulges in earnings management, the less sticky its cost will be.…”

Section: Introductionmentioning

confidence: 99%

Relationship between Real Earnings Management and Cost Behavior

Boakye

Atiso

Koranteng

2019

SJOM

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“…Economic explanations for the mechanism between changes in activity and changes in cost have been put forward. The main arguments in prior research consider asymmetric optimal resource commitment decisions (Banker et al, , ) and agency conflicts (Anderson et al, ; Chen, Lu, & Sougiannis, ; Dierynck et al, ; Xue & Hong, ). From the agency perspective, self‐interested managers' empire‐building behavior leads to cost stickiness (Anderson et al, ; Chen et al, ).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Globalization and firm‐level cost structure

Ding

Zheng

2019

Rev International Economics

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In this study, we draw on economic theories of cost structure and the effects of international trade on firms' productivity to assess firm‐level cost behavior in the context of globalization. We investigate why and how trade openness affects firms' cost structure by examining the changes of fixed inputs along with those in capacity levels. Using a sample consisting of 25 countries from 2000 to 2014, we find that trade openness does significantly affect firms fixed and variable cost inputs, which indicate that production uncertainty along with international trade is essential to the cost structure decision in terms of cost rigidity. Furthermore, larger firms are more likely to adopt a rigid cost structure with higher fixed costs and lower variable costs because they are more involved in the international economy and more exposed to associated uncertainties.

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“…A governança corporativa é vista como um conjunto de mecanismos que pode contribuir de forma eficaz para atenuar o comportamento oportunista dos gestores, reduzir a assimetria de informações, ajudar a proteger os interesses dos diversos stakeholders e também melhorar a qualidade das informações divulgadas (Luthan et al, 2016;Xue & Hong, 2016). Nesse sentido, diversos pesquisadores, como, por exemplo, Shah, Zafar e Durrani (2009), Fathi (2013), Habbash et al (2014) e Chen, Cheng e Wang (2015, destacam que a governança corporativa tem seu foco principal na melhoria da qualidade dos relatórios financeiros, bem como sobre a criação de mecanismos eficazes no monitoramento da gestão.…”

Section: Governança Corporativaunclassified

Determinantes da Qualidade da Informação Contábil em Grandes Companhias Abertas Listadas na BM&FBOVESPA

Moura

Zanchi

Mazzioni

et al. 2017

REPeC

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ResumoObjetivo: Identificar os fatores que influenciam na qualidade da informação contábil das maiores empresas listadas na BM&Bovespa. Método: Pesquisa realizada em uma amostra composta por 100 companhias abertas. A qualidade da informação foi analisada por meio de um índice desenvolvido por Fathi (2013), composto por 78 itens e que contemplam informações obrigatórias e voluntárias. Os fatores determinantes observados foram governança corporativa, empresa de auditoria, existência de comitê de auditoria, concentração acionária, investidores institucionais e internacionalização da empresa. Resultados: Os resultados revelaram um índice médio de evidenciação equivalente a 78%. A maioria das companhias estavam listadas em níveis diferenciados de governança; eram auditadas por big four e possuíam Comitê de Auditoria. O percentual médio de concentração acionária foi 41,37%; em 44% delas havia investidores institucionais no quadro acionário; e apenas 19% negociavam ações em bolsa americana. Em relação aos fatores determinantes, verificou-se que o fato de a empresa ser auditada por big four; possuir Comitê de Auditoria; possuir participação acionária de investidores institucionais; e negociar ações em bolsa americana reflete-se em informações divulgadas de melhor qualidade. Contribuições: Os achados fornecem evidências adicionais para a literatura existente, além de serem relevantes para os diversos usuários das informações contábeis, tais como analistas e investidores. Palavras-chave: Determinantes; Qualidade da informação contábil; Grandes companhias abertas listadas na BM&FBovespa.Determinantes da qualidade da informação contábil em grandes companhias abertas listadas na BM&FBOVESPA REPeC, Brasília, v. 11, n. 3, art. 5, p. 329-346, jul./set. 2017 Disponível online em www.repec.org.br

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Earnings management, corporate governance and expense stickiness

Cited by 73 publications

References 29 publications

Relationship between Real Earnings Management and Cost Behavior

Relationship between Real Earnings Management and Cost Behavior

Globalization and firm‐level cost structure

Determinantes da Qualidade da Informação Contábil em Grandes Companhias Abertas Listadas na BM&FBOVESPA

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