Testing Earning Management
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.
|Keywords||earnings management, periodic time series models|
|JEL||Accounting (jel M41)|
|Publisher||Erasmus School of Economics|
|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