Takeover protection and managerial myopia: Evidence from real earnings management

Zhao, Yulin; Chen, Kung H.; Zhang, Yinqi; Davis, Mark H. A.

doi:10.1016/j.jaccpubpol.2011.08.004

Cited by 141 publications

(132 citation statements)

References 49 publications

(136 reference statements)

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“…Many of the following studies could suffer from the same problem. For instance, in Zhao et al (2012) and Chi et al (2011), the suspect firms have significantly lower median performance than the non-suspect firms. Other things being equal, firms with smaller profits exhibit a higher level of REM activities on average (See Figure 2).…”

Section: Subsequent Research On Real Earnings Managementmentioning

confidence: 91%

“…McGuire et al (2012) study the impact of religion on financial reporting and find a positive association between religiosity and real earnings management. Zhao et al (2012) study the effect of takeover protection on real earnings management and find that less-protected firms are associated with higher levels of real earnings management. Chi et al (2011) examine the impact of audit quality on the choice of earnings management tools.…”

Section: Subsequent Research On Real Earnings Managementmentioning

confidence: 99%

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Re-Examining Real Earnings Management to Avoid Losses

Siriviriyakul

2013

SSRN Journal

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Section: Subsequent Research On Real Earnings Managementmentioning

confidence: 91%

Section: Subsequent Research On Real Earnings Managementmentioning

confidence: 99%

Re-Examining Real Earnings Management to Avoid Losses

Siriviriyakul

2013

SSRN Journal

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“…Furthermore, this study considers other control variables shown in the prior literature to be associated with accrual management (e.g. Klein, 2002;Roychowdhury, 2006;Cohen and Zarowin, 2010;Gunny, 2010;Badertscher, 2011;Kim et al, 2012;Zang, 2012;Zhao et al, 2012;Alissa et al, 2013;Duellman et al, 2013;). Specifically, the authors include absolute change in net income (ABS∆NI), size (SIZE), long-term indebtedness (LEVLONG), sum of inventory and receivables (INVREC), assets growth (GROWTH), financial performance (ROA), and an indicator variable for firms reporting losses (LOSS).…”

Section: Control Variables and Base Regression Modelmentioning

confidence: 99%

Accrual management as an indication of money laundering through legally registered Mafia firms in Italy

Ravenda¹,

Valencia‐Silva

Argilés

et al. 2018

AAAJ

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Purpose -This paper investigates how accounting is used to disguise and realize money laundering activities in specific socio-economic and political contexts and whether discretionary accruals can provide evidence of such illicit practices realized through legally registered Mafia firms (LMFs).Design/methodology/approach -The study is based on a sample of 224 Italian firms identified as LMFs, due to having been confiscated by judicial authorities because of their owners being accused of Mafia-type association. Using a multivariate regression model, specifically developed discretionary accrual proxies for LMFs are compared with those of a population of lawful firms (LWFs). Originality/value -This study adopts discretionary revenue and expense accrual proxies that provide additional insight into the simultaneous manipulation of revenues and expenses, linked to money laundering, which may not be fully detected by traditional aggregate accrual models.Furthermore, it suggests that the incentive for unlisted LMFs to manage accruals may be fostered by the irrelevance of their financial statements to trades with stakeholders. More importantly, this paper may aid regulators in identifying accounting signals that can be used in risk assessment models or in the detection of criminal practices.

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“…The survey further states that managers often choose to sacrifice the long term economic value of their firms to avoid more severe firm value damaged by market reactions to missing the earnings expectations of analysts and investors. Some studies also document that when managers face increased capital market pressure, they may sacrifice the long term value of a firm to achieve short term earnings benchmarks (Bhojrai and Libby 2005; Zhao et al 2012).…”

Section: Market Reactions To Ceo Successionsmentioning

confidence: 99%

CEO Succession, Investor Expectations, and Real Earnings Management

Young

Lin

Chien

et al. 2015

AJFA

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Recently, U.S. firms are switching CEO at the fastest pace and these events often cause severe stock market volatility on the uncertainty of the firm's future performance. This study investigates whether inverse market reaction on CEO succession will induce earnings management of new CEOs in order to protect their reputational and career prospects. From a sample of 2,418 firm-years during the post-SOX period of 2003 to 2012 by applying the regression analysis, we investigate two associations of real earnings management (REM) with CEO successions and with its market reaction respectively. Our results suggest new CEOs are more careful when manipulate earnings through REM activities. However, REM is negatively associated with market expectations on CEO successions, implying new CEOs may utilize REM to reverse the first bad impressions held by investors. We provide a new perspective with regard to market reactions to CEO successions, by examining how and why new CEOs may choose to manipulate earnings.

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Takeover protection and managerial myopia: Evidence from real earnings management

Cited by 141 publications

References 49 publications

Re-Examining Real Earnings Management to Avoid Losses

Re-Examining Real Earnings Management to Avoid Losses

Accrual management as an indication of money laundering through legally registered Mafia firms in Italy

CEO Succession, Investor Expectations, and Real Earnings Management

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