Earnings Management around Research and Development Manipulation

Rihab Guidara and Younes Boujelbene

International Journal of Academic Research in Accounting, Finance and Management Sciences, 2014, vol. 4, issue 2, 26-37

Abstract: The aim of this paper is to investigate the impact of research and development investment (R&D) on managers’ behaviour. Specifically, considering that R&D is a specific investment, inherently exposed to a high level of uncertainty and high information asymmetry and that R&D accounting choices are a controversial issue, the current study tries to evaluate R&D effect on earnings management. The study is conducted on a sample of French companies investing heavily in R&D and accounting data are collected from the Worldscope database. The earning management is estimated through the discretionary accruals. Results indicate that R&D favours both incentive and ability for managers’ earnings management.

Keywords: R&D; earnings management; accruals (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:hur:ijaraf:v:4:y:2014:i:2:p:26-37

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