Earnings Management to Exceed the Threshold: A Comparative Analysis of Consolidated and Parent-only Earnings

Akinobu Shuto ()

No 224, Discussion Paper Series from Research Institute for Economics & Business Administration, Kobe University

Abstract: This paper examines whether consolidated earnings are managed to a greater extent than parent-only earnings or vice versa in an attempt to exceed the threshold in Japanese firms. The analysis reveals that earnings management to avoid earnings decreases is more pronounced in parent-only earnings for the period 1980-1999. Further, it reveals that the management of parent-only earnings has been less pervasive following the introduction of the new consolidated reporting system in March 2000. In addition, this paper provides evidence suggesting that earnings management in consolidated earnings increased after March 2000. These results indicate the possibility that the new consolidated reporting system and principles reduce the incentive to manage parent-only earnings and increase that to manage consolidated earnings.

Keywords: Earnings management; Earnings distribution; Accounting regulation; Consolidated earnings; Parent-only earnings (search for similar items in EconPapers)
Pages: 48 pages
Date: 2005-09, Revised 2008-07
New Economics Papers: this item is included in nep-acc and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:kob:dpaper:224

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