The impact of leverage on accrual-based earnings management: The case of listed French firms

Lazzem, Safa; Jilani, Faouzi

doi:10.1016/j.ribaf.2017.07.103

Cited by 58 publications

(84 citation statements)

References 21 publications

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“…Jelinek (2007) suggest that leverage increases will reduce earnings management. Zamri et al (2013), Afza and Rashid (2014) and Lazzem and Jilani (2018) found that the level of leverage was able to reduce earnings management. Companies that have a high level of leverage are likely to face tighter control from the creditor, thus management is less motivated to do earnings management.…”

Section: Introductionmentioning

confidence: 99%

“…accounting theory (Watts & Zimmerman., 1986) presented that the closer a company with the violation of credit agreement based on accounting was more allowed the company manager to select the accounting procedure which moved the reported profit from the next period to now. Thus, the link between debt contracts and opportunistic behavior of earnings manipulation indicates a possible relationship between debt policy and earnings management (Lazzem and Jilani., 2018).…”

Section: Introductionmentioning

confidence: 99%

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Impact of Leverage and Firm Size on Earnings Management in Indonesia

Nalarreason

Sutrisno

Mardiati

2019

IJMMU

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This study aimed to determine the effect of leverage and firm size toward earnings management. This study used a sample of the financial report data from manufacturing companies listed on the Indonesia stock exchange for the 2013-2017 period. The data analysis testing in this study employed EViews (Econometric Views). The results showed that the best panel regression model in this study was random effect model. Consistent with agency theory and positive accounting theory, leverage and firm size has a positive effect on the earnings management for manufacturing companies in Indonesia. The empirical results showed that leverage and firm size increases provide encouragement for managers to manipulate earnings.

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Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Impact of Leverage and Firm Size on Earnings Management in Indonesia

Nalarreason

Sutrisno

Mardiati

2019

IJMMU

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“…Additionally, the contractual commitments for debt repayments leaves a low level of free cash flow available, which limit manager's discretions in sub-optimal projects (Jensen, 1986). Empirical research has found a large extent of evidence supporting "debt hypothesis" (DeFond and Jiambalvo (1994); Sweeney (1994); Becker, DeFond, Jiambalvo, and Subramanyam (1998); DeAngelo, DeAngelo, and Skinner (1994); B. H. Kim, Lisic, and Pevzner (2010); Jha (2013); Alzoubi (2017); Lazzem and Jilani (2018)). However, the controlling effect of debts to increase financial reporting quality is also suggested through other research (Ahn & Choi, 2009;Alsharairi, 2012;Jelinek, 2007;Rodríguez-Pérez & van Hemmen, 2010).…”

Section: Introductionmentioning

confidence: 99%

“…Empirical evidence in Vietnam, which takes specific market contexts into account, can provide an international aspect of this issue. Third, in studying the effect of leverage on earnings management, most of prior research focused on accrual-based earnings management (Alzoubi, 2017;DeFond & Jiambalvo, 1994;Jelinek, 2007;Jha, 2013;Lazzem & Jilani, 2018;Sweeney, 1994). However, as manager can use accrual-based earnings management and real activities manipulations as substitutes (Zang, 2011), the effect of leverage should be considered in a comprehensive view of both these strategies, rather than in isolation.…”

Section: Introductionmentioning

confidence: 99%

The effect of financial leverage on real and accrual-based earnings management in Vietnamese firms

Khanh

Thu

2019

Economics &Amp; Sociology

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Our research examines the effect of leverage on the form and extent of earnings management in Vietnamese listed firms. We use panel data of 241 companies on Vietnam stock markets in the period from 2010 to 2016 (1687 firm-years) and conduct GMM regression. Four models are employed to estimate the level of discretional accruals and real earnings management. Our research finds a positive relationship between leverage and earnings management, which is consistent to "debt hypothesis". Furthermore, a preference for real earnings management over accrualbased earnings management is observed among highly leverage firms. The findings notice the substitution between these two forms of earnings management and reinforce full attention to both accrual-based earnings management and real activities manipulations rather than to separated earnings management strategy.

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“…It was also suggested by Super and Shil (2017) that firms with higher leverage tend to have lower disclosure quality, suggested a tendency to manage earnings. Contrast to the above, study by Lazzem and Jilani (2018) on French firms and Christensen, Lee, Walker and Zeng (2015) on German firms suggested that firm leverage has a positive impact on earnings management as increased leverage provided incentives for managers to carry out earnings management activities.…”

Section: 4mentioning

confidence: 93%

The Impact of International Financial Reporting Standards (IFRS) on Accounting Quality in Malaysia

Keong

Pengb

Lengc

2019

JAFEE

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There are two objectives of this study, first,it is to examine and compare the accounting quality in pre-and post-implementations IFRS from the viewpoint of investors. Second ,is to identify the differences in the accounting quality between the shariah compliant and non-shariah compliant companies in pre-and post-implementations of IFRS. Using 2169 firm-year observations from firms listed on the Bursa Kuala Lumpur Stock Exchange over the period of 2008 to 2016, the result shows that the implementation of MFRS have reduced the firms’ earnings management. However, this study provides new arguments that Shariah-complaints firms in Malaysia do not necessary have greater incentives to report high-quality reporting based on the investor perspectives. Our evidence thus help to explains the different impact on IFRS adoption on accounting quality in Malaysia and shariah complaint compnaies.

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The impact of leverage on accrual-based earnings management: The case of listed French firms

Cited by 58 publications

References 21 publications

Impact of Leverage and Firm Size on Earnings Management in Indonesia

Impact of Leverage and Firm Size on Earnings Management in Indonesia

The effect of financial leverage on real and accrual-based earnings management in Vietnamese firms

The Impact of International Financial Reporting Standards (IFRS) on Accounting Quality in Malaysia

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