The Choice Between Accrual and Real Manipulation Around Information Uncertainty

Thi Thu Ha Nguyen () and Salma Ibrahim
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Thi Thu Ha Nguyen: Industrial University of Ho Chi Minh City
Salma Ibrahim: Kingston University

A chapter in Proceedings of the 4th International Conference on Research in Management and Technovation, 2024, pp 13-26 from Springer

Abstract: Abstract Previous studies on opportunistic earnings management using accrual and real manipulation related to benchmark-beating find mixed evidence, especially when investigating alternative mechanisms (i.e., accrual earnings management and real earnings management). One issue that has not been examined is the information uncertainty environment. We expect that greater information uncertainty would provide more ambiguity about earnings management for market participants. Therefore, if managers are opportunistic, they are more likely to choose the less costly earnings management mechanism, i.e., accrual manipulation. The overall results show that firms just meeting earnings benchmarks use more accrual earnings management but not real earnings management in the high information uncertainty environment. The results hold after controlling for endogeneity and other factors that may affect earnings management.

Keywords: Accrual earnings management; Real earnings management; Information uncertainty (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-981-99-8472-5_2

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DOI: 10.1007/978-981-99-8472-5_2

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