Earnings management through financing activities: Evidence from early debt extinguishments

Barua, Abhijit; Yi, Sheng

doi:10.1002/jcaf.22537

Cited by 1 publication

(1 citation statement)

References 42 publications

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“…They provided evidence that short-term debt maturity decreases earnings management practices at low levels of short-term debt, while earnings manipulation increases at high levels, demonstrating a U-shaped relationship. The same findings were discussed by Barua et al (2022) or Bhutta et al (2021) that shortterm debt moderates the relationship between earnings management behavior and investment efficiency. Mendoza et al (2021) broadened the previous findings and claimed that leverage and short-term debt affect earnings management practices negatively and nonlinearly.…”

Section: Brief Theoretical Backgroundsupporting

confidence: 66%

Corporate Debt and Earnings Management: Evidence From Slovakia

Valášková

Gajdosikova

2022

International Scientific Conference „Business and Management“

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Several different models have been developed worldwide to detect manipulative financial reporting in en-terprises. These earnings management practices help enterprises improve their financial performance or gain some advantages based on window dressing techniques. Moreover, there are several firm-specific factors and indicators that can influence the earnings management behavior of enterprises. The purpose of this paper is to test the relationship between corporate debt and earnings management in a sample of 15,716 Slovak firms over a 5-year period. The level of earnings management is measured by discretionary accruals using the Kasznik model, the debt of enterprises is quan-tified by several indicators (total indebtedness ratio, self-financing ratio, current and non-current indebtedness ratios, equity leverage ratio, and insolvency ratio). In this paper, a correlation analysis and an ANOVA method were applied to show if there is any statistically significant dependence between the level of discretionary accruals and corporate debt. The results indicate a positive relationship between the level of discretionary accruals and total indebtedness, non-current indebtedness, and insolvency ratios, while a negative relationship was revealed for self-financing and cur-rent indebtedness ratios.

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Section: Brief Theoretical Backgroundsupporting

confidence: 66%