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
Persistent URL dx.doi.org/10.1111/stan.12007, hdl.handle.net/1765/76784
Journal Statistica Neerlandica
Fok, D, & Franses, Ph.H.B.F. (2013). Testing earnings management. Statistica Neerlandica, 67(3), 281–292. doi:10.1111/stan.12007