The Timing of Asset Sales: Evidence of Earnings Management?

Poitras, Geoffrey; Wilkins, Trevor; Kwan, Yoke Shang

doi:10.1111/1468-5957.00455

Cited by 26 publications

(18 citation statements)

References 12 publications

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“…In doing so, we include a variable controlling for client size (FirmSize) in Model 1, as prior research has shown that auditors act more conservatively when auditing larger clients (e.g., Reynolds & Francis, 2000). Furthermore, we add variables that control for financial condition (Loss t-1 , CFO, and Leverage) and growth (SalesGrowth, PPEGrowth, and BTM) to the model, as highgrowth companies and companies that are in a weak financial condition are more likely to manage earnings to a greater extent (Matsumoto, 2002;Poitras, Wilkins, & Kwan, 2002). Finally, we also include a variable capturing the issuance of equity (Issuance) in our audit quality model.…”

Section: Company Characteristicsmentioning

confidence: 99%

The Time Dependence of Audit Firm Alumni Effects: Evidence from Audit Committees

Baumann

Ratzinger‐Sakel

2020

Int J Auditing

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This article empirically examines the time dependence of audit quality and audit fee effects resulting from the presence of audit firm alumni (AFA) on audit committees (ACs) in the German setting. Following the European Union's audit reform in 2014, the subject of this study is of particular importance, as European regulators have strengthened the position of ACs, while simultaneously restricting the presence of AFA on ACs. We find that the presence of AFA who have recently left their former employer on ACs is associated with higher audit quality, while we fail to find a significant effect on audit quality with regard to AFA who have left audit firms a longer period of time ago. In addition, the presence of AFA on ACs does not seem to affect audit fees. To the best of our knowledge, this study is the first to demonstrate time-dependent AFA effects related to ACs.

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Section: Company Characteristicsmentioning

confidence: 99%

The Time Dependence of Audit Firm Alumni Effects: Evidence from Audit Committees

Baumann

Ratzinger‐Sakel

2020

Int J Auditing

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“… The components of non‐operating income, such as profits from the sale of fixed assets or investments, have been shown to be tools of earnings management in the U.S. (Bartov, ) and other countries, such as Singapore (Poitras et al., ). …”

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confidence: 99%

Can Government Policies Induce Earnings Management Behavior? ‐Evidence from Chinese Public Listed Firms

Liu

et al. 2012

Financ Manag Account

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Earnings management behavior is a concern of standard setters, regulators, and investors. This study predicts that government policies can induce earnings management behavior. Based on a sample of 8,765 firm years ranging from 2002 to 2009, this study uses two methods to detect the effect of government policies on managers' earnings management behavior. One is the earnings distribution method developed by Burgstahler and Dichev (1997), and the other is the modified Jones model proposed by DeFond and Jiambalvo (1994). We find that policies issued by the China Securities Regulatory Commission (CSRC) can induce managers of listed firms to engage in earnings management to either avoid negative consequences (e.g., delisting) or to meet requirements (e.g., refinancing). So, although the purpose of government is to protect investors as well as to promote the healthy development of the securities market, its policies are a double‐edged sword: if there is no strict and effective control mechanism, government policies can harm investors and disturb the normal order of the securities market.

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“…Inoue and Thomas (1996), Poitras et al (2002) and Herrmann et al (2003) indicate a positive correlation between firm size and AS. Following Herrmann et al (2003), the log of total assets (SIZE) and prior AS (AS t−1 , found to be positively correlated with AS in a current quarter) are included as the control variables.…”

Section: Control Variables To As and Asdummy Equationsmentioning

confidence: 97%

The joint decision to manage earnings through discretionary accruals and asset sales around insider trading: Taiwan evidence

Huang

2008

J Econ Finan

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The Timing of Asset Sales: Evidence of Earnings Management?

Cited by 26 publications

References 12 publications

The Time Dependence of Audit Firm Alumni Effects: Evidence from Audit Committees

The Time Dependence of Audit Firm Alumni Effects: Evidence from Audit Committees

Can Government Policies Induce Earnings Management Behavior? ‐Evidence from Chinese Public Listed Firms

The joint decision to manage earnings through discretionary accruals and asset sales around insider trading: Taiwan evidence

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