The Examination of Real Earnings Management on the Threshold of Sensitive Earnings Amounts

Document Type : Original Article

Authors
sara shafiee 1
Fraydoon Rahnamay Roodposhti 2
Hamidreza Kordlouie 3
shadi shahverdiani 4
Maziar Ghasemi 5
1 Ph.D. student in Accounting, Accounting, Islamic Azad University, UAE Branch
2 Visiting Professor, Department of Accounting, Islamic Azad University, UAE Branch, Dubai, UAE.
3 Associate Professor and Faculty Member of Islamic Azad University, Islamshahr Branch
4 Assistant professor, management department, Islamic Azad University, Shahre Qods branch
5 Assistant Professor, Department of Management, Adiban Higher Education Institute, Garmsar, Semnan
Abstract
Investors and other users can use the company's earnings correctly for investment decisions and forecast cash flows and future earnings when the company's earnings are based on the actual financial performance of the company and not on the management's opinion in using the accounting methods. Accounting standards allow managers to have a wide range of options in selecting different accounting methods to calculate earnings, although managers may not use all of these options to achieve the company's goals. Therefore, the main purpose of this study is to investigate real earnings management on the threshold of sensitive earnings and using the data of 148 companies as a research sample in the period between 1391 to 1398 has been done. The results showed that in companies suspected of earnings management on the verge of zero earnings, abnormal operating cash flows and abnormal discretionary costs are significantly lower than other companies and in companies suspected of earnings management on the verge of zero earnings, costs Abnormal production is significantly higher than other companies. Abnormally operating cash flows and abnormal discretionary expenses are significantly lower in companies suspected of earnings management on the expected earnings threshold.
Keywords
Real Earnings Management
Sensitive Earnings Amounts Threshold
Abnormal Operating Cash Flows
Abnormal Optional Costs
Abnormal Production Costs
  • اسمعیل فرد، محمدرضا و رضالویی، عباس،(1397).بررسی مدیریت سود برای دستیابی به آستانه های سود،دومین کنفرانس بین المللی تحولات نوین در مدیریت ، اقتصاد و حسابداری،تهران،https://civilica.com/doc/782204
  • حجازی، رضوان، آدم بیرا، سمیرا، بهرامی زیارتی،مصطفی، (1395)، تشخیص مدیریت سود با استفاده از تغییرات در گردش دارایی و حاشیه سود، پژوهش های حسابداری مالی و حسابرسی، سال8، شماره 29، صص 73-95.
  • رضائی لشکاجانی، هاجر و صمدی لرگانی، محمود،(1394).،مطالعه تطبیقی رابطه بین مدیریت سود واقعی و مدیریت سود مبتنی بر اقلام تعهدی در دستیابی به میانگین سودآوری در شرکتهای پذیرفته شده در بورس اوراق بهادار تهران،اولین کنفرانس بین المللی حسابداری، مدیریت و نوآوری در کسب و کار،صومعه سرا،https://civilica.com/doc/396914
  • طاووسی، جمال؛ کشته گرف عبدالعلی؛ کمالیان، امین رضا.(1397). ارزشگذاری نادرست و سوگیری های رفتاری در بورس اوراق بهادار تهران، مهندسی مالی و مدیریت اوراق بهادار،دوره9،شماره39،صص 273-293.
  • فخاری، حسن؛ حسن نتاج کردی، محسن.(1397).اثر تعدیل کنندگی راهبری شرکتی بر ارتباط بین رقابت در بازار محصول و کیفیت سود پیش بینی شده توسط مدیریت، پژوهش های حسابداری مالی و حسابرسی،دوره10، شماره38،صص209-237.
  • فخاری، حسین و عدیلی،مجتبی، (1391)، بررسی رابطه بین جریان های نقدی آزاد و مدیریت سود از طریق فعالیت های واقعی در شرکت های پذیرفته شده در بورس اوراق بهادار تهران، مجله بررسی های حسابداری و حسابرسی ، دوره19، شماره3، صص78-63.
  • قدرتی، حسین، فیضی، سعید، (1394)، بررسی تاثیر حاکمیت شرکتی بر میزان مدیریت سود در بازار بورس اوراق بهادار تهران، دانش حسابرسی، سال چهاردهم، شماره 58.
  • کاری پیله رود، زهرا ؛ بیگلر، کیومرث، رضایی، فرزین.(1399).بررسی رابطه میان مالکیت نهادی، رقابت در بازار محصول و مدیریت سود،ششمین همایش ملی پژوهش های نوین در حوزه علوم انسانی ، اقتصاد و حسابداری ایران،تهران،https://civilica.com/doc/1117537
  • کرمی سحر؛اللهیاری ،عباس؛رضایی،علی.(1400). بررسی روابط بین پذیرش استانداردهای بین المللی گزارشگری مالی (IFRS) و حمایت از سرمایه‌گذاران با مدیریت سود در شرکت‌های پذیرفته شده در بورس اوراق بهادار تهران. فصلنامه علمی تخصصی رویکردهای پژوهشی نوین در مدیریت و حسابداری, 5(66), 103-118. Retrieved از http://majournal.ir/index.php/ma/article/view/854
  • لاری دشت بیاض, ساعی, قربانی. (2017). بررسی مدیریت سود واقعی برای اجتناب از زیان. مطالعات تجربی حسابداری مالی, 14(56), 155-‎
  • لاری دشت بیاض، محمود و ساعی، محمدجواد و قربانی، آرش،1396،بررسی مدیریت سود واقعی برای اجتناب از زیان،،،،،https://civilica.com/doc/889486
  • مرادزاده فرد، مهدی؛ ابراهیمی میمند، مهدی؛ مرادی، ملیحه.(1393). رابطه بین ویژگی‌های شرکت و اولویت مدیران برای گزینش آستانه سودپژوهش های حسابداری مالی، دوره6،شماره1،صص75-88.
  • مرادی، مهدی؛ محمد علی باقرپور ولاشانی؛ و آرش قربانی. ( 1395 ). کشف مدیریت سود از طریق توزیع تجربی سود، پژوهش های تجربی حسابداری، 6 ( 1 :) 19 –
  • هاشمی، سید عباس، سعید صمدی و افسانه سروش­یار. (1389). « ارزیابی توانمندی اجزای نقدی و تعهدی سود در پیش­بینی سود غیرعادی و تعیین ارزش شرکت های پذیرفته شده در بورس اوراق بهادار تهران»، داری مالی، ش 1 (3)، صص 93-112
  • Adut, D.; Holder, A. & Robin, A. (2013). “Predictive versus opportunistic earnings management, executive compensation, and firm performance”. J. Account. Public Policy, (32), 126-146.
  • Ahmed, A. S., Neel, M., Wang, D., 2013. Does mandatory adoption of IFRS improve accounting quality? Preliminary evidence. Contemporary Accounting 30(4), 1344-1372.
  • Aziatul ,W. G.Nur Aima, S,Zuraidah, M.S.(2015), Earnings Management: An Analysis of Opportunistic Behaviour, Procedia Economics and Finance 1(28).pp  190 – 201
  • Bartov, E., (1993). The timing of asset sales and earnings manipulation, The Accounting Review 68, 840–855.
  • Brown, L. (2001). A temporal analysis of earnings surprises: profits vs Losses, Journal of Accounting Research, Vol 39, No 2, Pp 221-241.
  • Chan, Y., Ghon Rhee, S., Veeraraghavan, M., & Zolotoy, L. (2014). Stock liquidity and managerial short-termism. Journal of Banking & Finance. 60: 44-59.
  • Chang, H.-Y., Liang, L.-H.and Yu, H.-F. (2019), Market power, competition and earnings management: accrual-based activities, Journal of Financial Economic Policy, Vol. 11 No. 3, pp. 368-384. https://doi.org/10.1108/JFEP-08-2018-0108
  • Chen, H., Tang, Q., Jiang, Y., Lin, Z., 2010. The role of international financial reporting standards in accounting quality: Evidence from the European Union. Journal of International Financial Management & Accounting. 21(3), 220-278.
  • Cher, K.S., Law, H.P., Lim, S.H. (2005). Earnings management to avoid losses and decreases. Working Paper. Nanyang Technological University. Nanyang Business School.
  • Cohen, D. A. Dey, and T. Lys. (2008). Real and accrual-based earnings management in the pre- and post- Sarbanes-Oxley period. The Accounting Review 83 (3): 757–787.
  • Cohen, D., & Zarowin. (2010).” Accrual-based and  real earnings management  activities  around  seasoned  equity  offerings.”. Journal of Accounting and Economics 50 (1): pp. 2–19.
  • Core, J. E., Hail, L., & Verdi, R. S. (2015). Mandatory disclosure quality, inside ownership, and cost of capital. European Accounting Review, Vol 24, No. 1, Pp. 1-29.
  • Degeorge, F., Patel, J. and Zeckhauser, R. (1999), Earnings management to exceed thresholds, Journal of Business, Vol 72, No 1, Pp 1-33.
  • Du, Q., and R. Shen. (2018). Peer Performance and Earnings Management. Journal of Banking & Finance, Vol. 89, No. 1, Pp. 125-137.
  • Eiler, Lisa and Filzen, Joshua J. and Jackson, Mark and Tama-Sweet, Isho. (2016). Real Earnings Management and the Properties of Analysts’ Forecasts. Available at SSRN: https://ssrn.com/abstract=2802189.
  • Enomoto, M., and Yamaguchi, T. (2016). Discontinuities in earnings and earnings change distributions after JSOX implementation: Empirical evidence from Japan, available at: http://ssrn.com/abstract=2622396.
  • Ewert, R. and A. Wagenhofer)2005(.. Economic effects of tightening accounting standards to restrict earnings management. The Accounting Review80 (4): 1101-1124.
  • Frazzini, A., & Lamont, O. (2007). The Earnings Announcement Premium and Trading Volume. Unpublished Working paper. AQR Capital Manage ment and Harvard University.
  • Gamba, A. & Triantis, A.J., (2008), “The value of financial flexibility”, Journal of Finance, Vol. 63, No. 5.
  • Graham, J.R. Harvey, C.R. and Rajgopal, S. (2005). “The Economic Implications of Corporate Financial Reporting”. Journal of Accounting and Economics, 40: 3-73.
  • Gray, P.,Koh, P.S. Tong, Y. H.( 2009). Accruals Quality, Information Risk and Cost of Capital: Evidence from Australia. Journal of Business Finance and Accounting, Vol. 36, No. 1 & 2, PP. 51-72. 16.
  • Gunny, Katherine. (2010). The Relation Between Earnings Management Using Real Activities Manipulation and Future Performance: Evidence from Meeting Earnings Benchmarks, Contemporary Accounting Research Vol. 27 3 (Fall 2010) pp. 855–888.
  • Habib, A., Hansen, J.C., 2008. Target shooting: Review of earning management around earnings Journal of Accounting Literature. 27, 25-70.
  • Hair, J. Tomas, G., (2016), A primer on partial least squares structural equations modeling (PLS-SEM). Adel Azar, Rasol Gholamzade , Tehran, Negahedanesh. [In Persian]
  • Halaoua, S, Hamdi, B,Mejri, T,(2017). Earnings Management to Exceed Thresholds in Continental and Anglo-Saxon AccountingModels: The British and French Cases.Research in International Business and Financehttp://dx.doi.org/10.1016/j.ribaf.2016.09.019
  • Halaoua.s,.Badreddine,H.Tarek, M.(2016). Earnings management to exceed thresholds in continental and Anglo-Saxon accounting models: The British and French cases, Research in International Business and , 39. DOI:1016/j.ribaf.2016.09.019.
  • Healy, P., Wahlen, J., (2014), "A review of the earnings management literature and its implication for standard setting", Accounting Horizons, Vol. 13, No. 4, PP. 365-383.
  • Iatridis, George. George Kadorinis. (2009). Earnings management and firm financial motives: A financial investigation of UK listed firms. International Review of Financial Analysis, Vol 18, Pp 164–173.
  • Jia, Y., 2013. Meeting or missing earnings benchmarks: The role of CEO Journal of Business Finance & Accounting. 40(3-4), 373-398.
  • Kim, Young Sang & Mathur, Ike, (2008). The impact of geographic diversification on firm performance, International Review of Financial Analysis, Elsevier, Vol. 17, No 4, Pp 747-766.
  • Kothari, S.P., Mizik, N. & Roychowdhury, S. (2012).” Managing for the moment: The role of real activity versus accruals earnings management in SEO valuation”. SSRN Electronic Journal, DOI:10.2139/ssrn.1982826.
  • Krishnan, G. (2003). Audit quality and the pricing of discretionary accrual. Auditing, 22, 109-126.
  • Li F.(2010). Annual report readability, current earnings, and persistence. Journal of Accounting and Economics, Vol. 45, pp. 221247-.
  • Matsunaga, S.R. and Park, C.W. (2001), The effect of missing a quarterly earnings benchmark on the CEO’s annual bonus, The Accounting Review, Vol 76, No 3, Pp 313-332.
  • Melendrez, K., Schwartz, W., Trombley, M., 2013. Cash Flow and Accrual Surprises: Persistence and Return Implications. Journal of Accounting, Auditing, and Finance, 23 (4), PP.573-592.
  • Richardson, S., Teoh, S.H. andWysocki, P.D. (2004). The walkdown to beatable analyst forecasts: the role of equity issuance and insider trading incentives, Contemporary Accounting Research, Vol. 21, No 4, Pp 885-924.
  • Roychowdhury, S. (2006). “Earnings  management  through  real activities manipulation”.  Journal of Accounting and Economics 42 (3).pp. 335–370.
  • Siregar, V. S. & Utama, S. (2008). “Type of earnings management and the effect of ownership structure: firm size, and corporate governance practice: evidence from Indonesia”. The International Journal of Accounting, 43, 1-27.
  • Stavros .,A D.George ,.G.(2017). Earnings Management to Avoid Losses and Earnings Declines in Croatia, Computational Economics and Econometrics,9(3).
  • Sun, Jerry and Guoping Liu. (2016). Does analyst coverage constrain real earnings management?, The Quarterly Review of Economics and Finance, Volume 59: 131-140.

Wang, yi-shu, and Zhen-Jia Liu. (2016). Meeting dividend thresholds through earnings management in Chinese listed high-tech industries: The role of discretionary accruals and Real earnings management, Transylvanian Review Journal.