Achieving earnings target through real activities manipulation: lesson from stock exchange of Thailand

Karoon Suksonghong and Azlan Amran

International Journal of Monetary Economics and Finance, 2020, vol. 13, issue 3, 260-268

Abstract: This paper aims to investigate managers' intention to manage firms' earnings through operational activities intervention. The real activities manipulation through discretionary expenses, sales manipulation, and production manipulation was inspected using the sample of the Stock Exchange of Thailand listed companies. In this study, we identified firms reporting small earnings or small growth in earnings as the suspect firms. Our results revealed that the executives of the suspect firms engage in real activities manipulation to either avoid loss or to smooth firm's earnings. Given the fact that the operational activities intervention is hard to detect, the market regulators of the emerging countries need to monitor such practise as well as introduce legislation relevant to this form of corporate fraud.

Keywords: corporate finance; earning management; financial report; real activity manipulation; securities analysis; stock exchange of Thailand. (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijmefi:v:13:y:2020:i:3:p:260-268

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