Do managers reduce reported earnings before a workforce reduction announcement? Evidence from French listed firms

Les dirigeants gèrent-ils les résultats comptables avant d’annoncer une réduction d’effectifs ? Le cas des entreprises françaises cotées

Marie-Anne Verdier () and Jennifer Boutant
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Marie-Anne Verdier: LGCO - Laboratoire Gouvernance et Contrôle Organisationnel - UT3 - Université Toulouse III - Paul Sabatier - UT - Université de Toulouse
Jennifer Boutant: CRM - Centre de Recherche en Management - UT Capitole - Université Toulouse Capitole - UT - Université de Toulouse - IAE - Institut d'Administration des Entreprises - Toulouse - CNRS - Centre National de la Recherche Scientifique

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Abstract: This paper examines whether firms engage in earnings management activities in the context of workforce reductions. We assume that firms use income-decreasing accruals before workforce reduction announcements to show that the operation is necessary and thus to avoid incurring political costs. Based on 120 workforce reduction announcements for 104 French listed companies over the period 2007-2012, our results confirm that firms manage earnings downwards in the year before workforce reduction announcements (approximately 4% of total assets). Overall, the results validate the political cost hypothesis in the context of workforce reductions.

Keywords: réduction d’effectifs; gestion des résultats; coûts politiques; parties prenantes; sociales (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (2)

Published in Comptabilité Contrôle Audit / Accounting Auditing Control, 2016, 22 (3), pp.9-45. ⟨10.3917/cca.223.0009⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01522595

DOI: 10.3917/cca.223.0009

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