Profit management in the case of financial distress and global volatile market behaviour: Evidence from Borsa Istanbul Stock Exchange

Tuğba Kayhan, Temur Kayhan and Engin Yarbaşi
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Tuğba Kayhan: Management Information Systems, Commerce Faculty, Yeditepe University, Istanbul, Turkey
Temur Kayhan: Economics and Finance, School of Business and Management Sciences, Istanbul Medipol
Engin Yarbaşi: International Business and Trade, Commerce Faculty, Yeditepe University, Istanbul, Turkey

Theoretical and Applied Economics, 2019, vol. XXVI, issue 3(620), Autumn, 179-192

Abstract: The purpose of this paper is to find out how firms manage earnings under volatile market behaviour and financial distress in Borsa Istanbul Stock Exchange (BIST). We used in order to determine four discretionary accruals models such as Jones, Adjusted-Jones, Kasznik, and Kothari. 171 listed companies in BIST for the annual data between 2006 and 2016 were used. Model was analysed by using panel data methods such as fixed effects, random effects estimation. Our results indicate that nondiscretionary accruals, discretionary accruals, firm size and leverage by the future profit value are significant determinants of earning management behaviour in Turkey. However, we do not find a significant relation between future profitability and volatile market index, financial distress. This research will lead the way of accounting standard setters and policy makers to understand earning management activities under volatile market behaviour and financial distress in Borsa Istanbul Stock Exchange BIST.

Keywords: discretionary accruals; earning management; profit management. (search for similar items in EconPapers)
Date: 2019
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