NEW EVIDENCE ON THE SUBSTITUTION BETWEEN ACCRUAL EARNINGS MANAGEMENT AND REAL EARNINGS MANAGEMENT IN UNITED STATES FIRMS

Stephanie Monteiro Miller and Aamer Sheikh

Accounting & Taxation, 2023, vol. 15, issue 2, 1-14

Abstract: This paper provides new evidence on the relation between accumulated accrual earnings management (AEM) and current real earnings management (REM) using new, more intuitive measures. It also investigates the time-series properties of REM and constructs a meaningful measure of accumulated REM to explore the relation between accumulated REM and current AEM. The results show that REM, like AEM, tends to reverse over time, and that while constraints on the ability to use AEM are associated with a shift toward REM, constraints on the ability to use REM are not associated with a shift toward AEM.

Keywords: Earnings Management; Discretionary Accruals; Real Earnings Management (search for similar items in EconPapers)
JEL-codes: M40 M41 (search for similar items in EconPapers)
Date: 2023
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