Real earnings management: A review of the international literature

Habib, Ahsan; Ranasinghe, Dinithi; Wu, Julia; Biswas, Pallab Kumar; Ahmad, Fawad

doi:10.1111/acfi.12968

Cited by 75 publications

(46 citation statements)

References 237 publications

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“…Extant literature use Roychowdhury (2006) models extensively to measure real earnings management (Habib et al, 2022). However, these models present some limitations and does not reflect real earnings management fully.…”

Section: Resultsmentioning

confidence: 99%

Impact of product market competition on real activity manipulation: Moderating role of managerial ability

Biswas

Ranasinghe

Tan

2022

Accounting & Finance

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In this study, we examine whether managerial ability moderates the association between product market competition and real earnings management. Prior literature largely supports the disciplinary effect of competition, suggesting that competition reduces real activity manipulation. We argue that this association is different depending on the level of managerial ability. Based on the reputation hypothesis, we argue that able managers negatively moderate the association between competition and real activity manipulation. Using a sample of US listed companies from 1997 to 2016, we find evidence to support our moderating assertion. A battery of robustness tests validates our original findings.

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Section: Resultsmentioning

confidence: 99%

Impact of product market competition on real activity manipulation: Moderating role of managerial ability

Biswas

Ranasinghe

Tan

2022

Accounting & Finance

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“…Al respecto, se hizo la búsqueda y gestión de información acerca de las categorías de contabilidad administrativa y control de ingresos o ganancias, observando en Habib et al (2022) una revisión sistemática de literatura acerca de los factores que determinan la gestión estratégica de las ganancias reales (estrategia REM por sus siglas en ingles) y reconocen que la contabilidad administrativa basada en informes financieros, auditoría interna y control del manejo de ventas y ganancias, revelan información más objetiva, susceptible de ser considerada para que la organización compita en escenarios internacionales, aspecto que se cumple en el caso que se ha estudiado. Chen et al (2021) encuentran que la administración de las ganancias reales aumenta después de la implementación de tecnología del lenguaje de información comercial (XBRL), que está regulado de manera dual por el comité de valores de China y por el ministerio de Finanzas para efectos fiscales; dado el efecto perjudicial a largo plazo en la economía del sector público que generan las empresas por la gestión de ventas y ganancias sobre el valor o capitalización de la empresa.…”

Section: Discussionunclassified

Aplicación del modelo de sistema corporativo abierto para el manejo de la contabilidad administrativa del Grupo Empresarial SACSA

Mejía

Cuadras²,

Valenzuela-Valenzuela³

et al. 2023

eyn

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El objetivo fue proponer la aplicación de un modelo de sistema corporativo abierto para el control de la contabilidad administrativa y el manejo estratégico de ingresos, a fin de evitar riesgos en la red de promotores de habilitación o financiamiento que ofrece el Grupo Empresarial SACSA. Con una metodología cualitativa, de tipo exploratoria y descriptiva, se utilizó el método de estudio de caso y aplicó el modelo de sistema corporativo-operativo abierto para identificar las fuerzas impulsoras y restrictivas del manejo estratégico de las ventas y las ganancias de la organización, lo que se complementó con el método de análisis sistemático de literatura científica en correspondencia al control administrativo y estratégico de las empresas. Los hallazgos revelan que el modelo permite optimizar el manejo del control de ingresos y ganancias, documentar el proceso en reportes de información contable y financiera a través del sistema corporativo abierto con características operativas e informativas de la contabilidad administrativa, que deben estar estrechamente vinculados a los sistemas de desarrollo tecnológico y a los sistemas de capacitación del recurso humano. Con su implementación se mejora la operacionalización de la información contable y administrativa, lo que permiten redefinir responsabilidades y funciones del personal, además de propiciar la creación de estrategias innovadoras de base certificada, dirigidas a factores involucrados en el proceso de ventas para obtener mayores beneficios y para mejorar la rentabilidad de la empresa.

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“…Overall, our results suggest that high-status AC chairs are more likely to play a role in detecting and constraining deviations from normal business practices (Cohen et al , 2008) than in monitoring accrual-based manipulation. These findings may be explained by the fact that real activity manipulation is less likely to draw the scrutiny of auditors than accruals management (Cohen and Zarowin, 2010; Commerford et al , 2019; Habib et al , 2022), and the specific competencies and connections of high-status directors are a valuable resource for monitoring this form of activity. Additionally, we find that a higher status of AC chairs relative to the CEO is associated with less manipulation of real activities.…”

Section: Introductionmentioning

confidence: 99%

The desire of prestigious audit committee chairs: what are the benefits for financial reporting quality?

Broye

Johannes

2023

MAJ

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Purpose This study aims to examine how the prestige of audit committee (AC) chairpersons influences earnings management. Design/methodology/approach The sample contains 1,973 firm-year observations of French listed firms for the period 2007–2018. The authors examine the status of AC chairs and CEOs by focusing on the French business elite system. This study tests the association between AC chairs’ (relative) status and the level of earnings management using measures of accrual earnings management and real earnings management (REM). Findings The results of this study do not show that high-status AC chairs constrain accruals manipulation. However, the results provide evidence that they play a key role in constraining REM. High-status AC chairs are more likely to enhance the monitoring of this type of manipulation, given their thorough knowledge and understanding of the firm’s business environment and practices. This study also finds evidence that AC chairs with a status higher than CEOs are associated with lower levels of REM. The results suggest that prestigious AC chairs influence lower status CEOs’ strategic decisions. Originality/value This study demonstrates that high-status AC chairs play an important role in detecting and constraining deviations from normal business practices. The results have substantial implications for boards, which will benefit from an understanding of how the appointment of high-status chairs affects financial reporting quality.

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Real earnings management: A review of the international literature

Cited by 75 publications

References 237 publications

Impact of product market competition on real activity manipulation: Moderating role of managerial ability

Impact of product market competition on real activity manipulation: Moderating role of managerial ability

Aplicación del modelo de sistema corporativo abierto para el manejo de la contabilidad administrativa del Grupo Empresarial SACSA

The desire of prestigious audit committee chairs: what are the benefits for financial reporting quality?

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