Is there something rotten in Denmark? Earnings management to avoid small losses

Finn Schøler ()
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Finn Schøler: Department of Management Science and Logistics, Aarhus School of Business, Postal: The Aarhus School of Business, Fuglesangs Allé 4, 8210 Aarhus V, Denmark, http://www.asb.dk/staff/bs/fsc.aspx?page=%7B803EFF10-69F7-4C0F-AEE3-F7F410E4B6F2%7D

No R-2006-04, Financial Reporting Research Group Working Papers from University of Aarhus, Aarhus School of Business, Department of Business Studies

Abstract: This study focuses on earnings management by investigating the frequency distribution of the reported earnings in a European country. In particular, the relation between main “manageable” elements of working capital and reported earnings is examined. The modified and extended Jones model is used to identify and separate discretionary accruals in order to identify pre-managed earnings. By comparing the frequency distribution of these calculated pre-managed earnings and the reported earnings, it is shown that the combination of the research of earnings management based on studies of irregularities in the earnings frequency distribution and studies of discretionary accruals can be a powerful approach to examining the existence of earnings management

Keywords: Discretionary accruals; Earnings management; Frequency distribution; Reported Earnings (search for similar items in EconPapers)
Pages: 22 pages
Date: 2006-06-26
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Citations: View citations in EconPapers (1)

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