What Have We Learned About Earnings Management? Integrating Discontinuity Evidence

David Burgstahler and Elizabeth Chuk

Contemporary Accounting Research, 2017, vol. 34, issue 2, 726-749

Abstract: The accounting literature includes numerous examples of discontinuities at prominent benchmarks that are widely interpreted as evidence that earnings are managed to meet those benchmarks. However, there are a few examples where discontinuities do not exist, which are sometimes interpreted as inconsistent with earnings management. Alternative explanations for discontinuities have also been suggested. This paper reviews, evaluates, and integrates the available evidence and concludes that the theory that earnings are managed to meet benchmarks provides the simplest and most complete explanation for the body of discontinuity†related evidence.La littérature comptable regorge d'exemples de discontinuités à des valeurs de référence essentielles largement interprétés comme attestant la gestion du résultat de manière en vue de l'atteinte de ces valeurs. Il existe cependant quelques exemples de cas dans lesquels les discontinuités sont inexistantes, situation que l'on juge parfois incompatible avec la gestion du résultat. D'autres explications des discontinuités ont aussi été suggérées. Les auteurs étudient, évaluent et compilent les éléments probants disponibles et concluent que la théorie selon laquelle le résultat est géré de manière à ce que les valeurs de référence soient atteintes fournit l'explication la plus simple et la plus complète, en ce qui a trait à l'ensemble des éléments probants liés aux discontinuités.

Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:wly:coacre:v:34:y:2017:i:2:p:726-749

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