Earnings Management to Avoid Losses: Evidence from India

Shette Rachappa ()
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Shette Rachappa: Indian Institute of Management Kozhikode

No 255, Working papers from Indian Institute of Management Kozhikode

Abstract: The present study examine whether Indian corporates undertake earnings management methods to avoid earnings losses. First, this paper provides evidence that firms manage reported earnings to avoid losses in India. Second, the results indicate that two components of earnings, cash from operations and changes in working capital, are used to achieve increases in earnings. The robustness of the results is examined under various scenarios. The results are consists with existing literature. The present study support two theories based on stakeholder’s use of informationprocessing heuristics and prospect theory about the motivation for avoidance of earnings losses. The results are useful to regulators, investors and financial analysts

Keywords: Social enterprises (search for similar items in EconPapers)
Pages: 18 pages
Date: 2018-02
New Economics Papers: this item is included in nep-hme and nep-upt
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Citations: View citations in EconPapers (2)

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