Accrual earnings management in response to an oil price shock

Frode Kjærland, Fredrik Kosberg and Mathias Misje

Journal of Commodity Markets, 2021, vol. 22, issue C

Abstract: The aim of this study was to examine the relationship between the oil price shock of 2014 and earnings management of oil companies listed on the Oslo Stock Exchange. The results revealed a significant increase in earnings management following the oil price drop. Moreover, we found that companies adjusted their earnings and abnormal income-decreasing accruals were identified during the third and fourth quarters of 2014. We attribute this finding to the big bath strategy. The contribution of this study promotes the understanding of the effect of macroeconomic shocks on earnings management behaviour, and it supplements and expands the earnings management literature in this homogenous industry.

Keywords: Accrual earnings management; Oil industry; Oil price shock (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jocoma:v:22:y:2021:i:c:s2405851320300155

DOI: 10.1016/j.jcomm.2020.100138

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