Earnings management to avoid earnings decreases and losses implies that the time series properties of the last quarter in the fiscal year differ from those of the other three quarters. We propose a simple parametric methodology to diagnose such differences. Application to a random sample of 390 firms in the Compustat database gives strong evidence of earnings management.

Additional Metadata
Keywords earnings management, periodic time series models
JEL Accounting (jel M41)
Publisher Erasmus School of Economics
Persistent URL hdl.handle.net/1765/17346
Series Econometric Institute Research Papers
Journal Report / Econometric Institute, Erasmus University Rotterdam
Fok, D, & Franses, Ph.H.B.F. (2009). Testing Earning Management (No. EI 2009-31). Report / Econometric Institute, Erasmus University Rotterdam (pp. 1–21). Erasmus School of Economics. Retrieved from http://hdl.handle.net/1765/17346