Opportunistic earnings manipulation among bankrupt unlisted firms - How and when they do that -

Manipulación de resultados oportunista entre empresas en concurso no cotizadas – cómo y cuando lo hacen -

Domenico Campa () and María del Mar Camacho Miñano ()
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Domenico Campa: School of Business Trinity College Dublin College Street, Dublin, Ireland
María del Mar Camacho Miñano: Universidad Complutense de Madrid. Departamento de Economía Financiera y Contabilidad II (Contabilidad), https://www.ucm.es//departamento-de-administracion-financiera-y-contabilidad

No 13-05, Documentos de trabajo de la Facultad de Ciencias Económicas y Empresariales from Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales

Abstract: Firms’ bankruptcy is a problem not only related to companies but also affects social welfare. Analysing a matched sample of bankrupt and healthy unlisted companies from a code law institutional setting (Spain), this paper has three main objectives: it aims to demonstrate that bankrupt firms are more keen to manage financial statements in comparison with their non-bankrupt pairs; it investigates when and what practices they use; finally, it provides empirical evidence across time and sectors. Using proxies of sale and production cost manipulation, the results highlight upwards earnings manipulation among Spanish bankrupt firms in comparison with healthy ones, starting at least four years before the beginning of the legal procedure, sale and cost manipulation, used differently in each sector and across the time period investigated.

Keywords: Earnings management; Bankruptcy; Real manipulation activities; Code law setting; Unlisted companies.; Manipulación del resultado; Concurso de acreedores; Actividades reales de manipulación; Marco institucional del derecho romano; Empresas no cotizadas. (search for similar items in EconPapers)
JEL-codes: G33 M41 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2013-05
Note: We acknowledge the support of Complutense University of Madrid and BSCH project No. 931559 of INIFCO research group. We also want thank Dr. Javier Martinez for his help in relation to the legal topics and the participants to the workshop held at the Complutense University of Madrid for their helpful insights.
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