ABSTRACT:
In the present competitive business environment, the attention regarding Real Earnings Management (REM) has been increased as a substitute approach of Accrual-Based Earnings Management (AEM). So, the aim of the present study is to study the techniques and consequences of real earnings management. This study has numerous implications. This study will benefit to the researchers, accounting and regulatory bodies. And, enhance the understanding of the stakeholders regarding the techniques which are adopted by the firms to manipulate their earnings.
Cite this article:
Kirti Aggarwal. Earnings Management Practices in Indian Corporate Sector. Asian Journal of Management. 2021;12(4):401-5. doi: 10.52711/2321-5763.2021.00060
Cite(Electronic):
Kirti Aggarwal. Earnings Management Practices in Indian Corporate Sector. Asian Journal of Management. 2021;12(4):401-5. doi: 10.52711/2321-5763.2021.00060 Available on: https://ajmjournal.com/AbstractView.aspx?PID=2021-12-4-8
REFERENCES:
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5. Brown, K., Chen, V.Y.S., and Kim, M. Earnings management through real activities choices of firms near the investment–speculative grade borderline. Journal of Accounting and Public Policy. 2015;34(1):74-94. doi.org/10.1016/j.jaccpubpol.2014.09.002
6. Burnett, B.M., Cripe, B.M., Martin, G.W., and McAllister, B.P. Audit quality and the trade-off between accretive stock repurchases and accrual-based earnings management. The Accounting Review. 2012;87(6):1861-1884. doi.org/10.2308/accr-50230
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8. Chi, W., Lisic, L.L., and Pevzner, M. Is enhanced audit quality associated with greater real earnings management? Accounting Horizons. 2011;25(2):315-335. doi.org/10.2308/acch-10025
9. Cohen, D., Dey, A., and Lys, T. Z. Real and accrual-based earnings management in the pre-and post-Sarbanes-Oxley periods. The Accounting Review. 2008;83(3):757-787. doi.org/10.2308/accr.2008.83.3.757
10. Cohen, D.A., and Zarowin, P. Accrual-based and real earnings management activities around seasoned equity offerings. Journal of Accounting and Economics. 2010;50(1):2-19. doi.org/10.1016/j.jacceco.2010.01.002
11. Debnath, N.C., Chowdhury, S.P., and Khan, S. Ownership structure and real earnings management: An empirical study on emerging economy. Corporate Ownership and Control. 2021:18(2):74-89.
12. Dechow, P., and Skinner, D. Earnings management: Reconciling the views of accounting academics, practitioners, and regulators. Accounting Horizons. 2000;14(2):235-250. doi.org/10.2308/acch.2000.14.2.235
13. Elhaj, E.B., and Mansor, N. Earnings management in developed and developing countries: A review of recent literature. American Based Research Journal. 2019;8(01): 14-26.
14. Enomoto, M., Kimura, F., and Yamaguchi, T. Accrual-based and real earnings management: an international comparison for investor protection. Journal of Contemporary Accounting and Economics. 2015;11(3):183-198. doi.org/10.1016/j.jcae.2015.07.001
15. Ewert, R., and Wagenhofer, A. Economic effects of tightening accounting standards to restrict earnings management. The Accounting Review. 2005;80(4):1101-24. doi.org/10.2308/accr.2005.80.4.1101
16. Ferentinou, A.C., and Anagnostopoulou, S.C. Accrual-based and real earnings management before and after IFRS adoption: The case of Greece. Journal of Applied Accounting. 2016;17(1):2-23. doi.org/10.1108/JAAR-01-2014-0009
17. Garg, M.C. Recent trends in accounting with particular reference to reporting standards in the corporate sector in India”, Unpublished Doctoral Thesis, Maharshi Dayanand University, Rohtak. 1992.
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19. Gunny, K. The relation between earnings management using real activities manipulation and future performance: evidence from meeting earnings benchmarks. Contemporary Accounting Research. 2010;27(3):855-888. doi.org/10.1111/j.1911-3846.2010.01029.x
20. Healy, P., and Wahlen, J. A review of the earnings management literature and its implications for standard setting. Accounting Horizons. 1999;13(4):365-83. doi.org/10.2308/acch.1999.13.4.365
21. Herrmann, D., Inoue, T., and Thomas, W.B. The sale of assets to manage earnings in Japan. Journal of Accounting Research. 2003;41(1):89-108. doi.org/10.1111/1475-679X.00097
22. Ho, L.C.J., Liao, Q., and Taylor, M. Real and accrual-based earnings management in the pre-and post-IFRS periods: Evidence from China. Journal of International Financial Management and Accounting. 2015;26(3): 294-335. doi.org/10.1111/jifm.12030
23. Howe, M.A. Management fraud and earnings management: Fraud versus GAAP as a means to increase reported income. PhD Thesis, University of Connecticut. Available at <http://Digitalcommons.Uconn.Edu/Dissertations/AAI9949112/>. 1999.
24. Jones, J.J. Earnings Management During Import Relief Investigations. Journal of Accounting Research. 1991;29(2):193-228. doi.org/10.2307/2491047
25. Jungeun, C., Jaimin, G., and Jaehong, L. Chaebol firms’ real and accrual-based earnings management in the pre-and post-Asian financial crisis periods. Journal of Modern Accounting and Auditing. 2012;8(7):915-31.
26. Lenard, M.J., Petruska, K.A., Alam, P., and Yu, B. Internal control weaknesses and evidence of real activities manipulation. Advances in Accounting. 2016;33:47-58. doi.org/10.1016/j.adiac.2016.04.008
27. Leuz, C., Nanda, D., and Wysocki, P.D. Earnings management and investor protection: An international comparison. Journal of Financial Economics. 2003;69(3):505-527. doi.org/10.1016/S0304-405X(03)00121-1
28. Lo, K. Earnings management and earnings quality. Journal of Accounting and Economics. 2008;45:350-57. doi.org/10.1016/j.jacceco.2007.08.002
29. Malik, M. Corporate governance and real earnings management: The role of the board and institutional investors. Journal of Knowledge Globalization. 2015;8(1):37-87.
30. Moradi, M., Salehi, M., and Zamanirad, M. Analysis of incentive effects of managers’ bonuses on real activities manipulation relevant to future operating performance. Management Decision,. 2015;53(2):432-50. doi.org/10.1108/MD-04-2014-0172
31. Perols, J.L., and Lougee, B.A. The relation between earnings management and financial statement fraud. Advances in Accounting. 2011;27(1):39-53. doi.org/10.1016/j.adiac.2010.10.004
32. Ronen, J., and Yaari, V. Earnings management: Emerging insights in theory, practice, and research. Springer Science+Business Media, LLC. 2008.
33. Roychowdhury, S. Earnings management through real activities manipulation. Journal of Accounting and Economics. 2006;2(3):335-370. doi.org/10.1016/j.jacceco.2006.01.002
34. Schipper, K. Commentary on earnings management. Accounting Horizons. 1989;3(4);91-102.
35. Sellami, M. Incentives and constraints of real earnings management: The literature review. International Journal of Finance and Accounting. 2015;4(4):206-213.
36. Tabassum, N., Kaleem, A., and Nazir, M.S. Earnings management through overproduction and subsequent performance: An empirical study in Pakistan. International Journal of Indian Culture and Business Management. 2014;9(3):267-281. doi.org/10.1504/IJICBM.2014.064693
37. Tabassum, N., Kaleem, A., and Nazir, M.S. Real earnings management and future performance. Global Business Review. 2015;16(1):21-34. doi.org/10.1177/0972150914553505
38. Xu, R.Z., Taylor, G.K., and Dugan, M.T. Review of real earnings management literature. Journal of Accounting Literature. 2007;26:195-228.
39. Zang, A.Y. Evidence on the trade-off between real activities manipulation and accrual-based earnings management. The Accounting Review. 2012;87(2): 675-703. doi.org/10.2308/accr-10196
1. Abad, D., Cutillas-Gomariz, M.F., Sanchez-ballesta, J.P., and Yague, J. Real earnings management and information asymmetry in the equity market. European Accounting Review. 2018;27(2):209-35. doi.org/10.1080/09638180.2016.1261720
2. Alhadab, M., Clacher, I., and Keasey, K. Real and accrual earnings management and IPO failure risk. Accounting and Business Research. 2015;45(1):55-92. doi.org/10.1080/00014788.2014.969187
3. Baatour, K., and Othman, H.B. Legal origin, economic freedom and earnings management practices: MENA evidence. International Journal of Accounting, Auditing and Performance Evaluation. 2016;12(1):1-23. doi.org/10.1504/IJAAPE.2016.073892
4. Boujelben, S., Khemakhem-Feki, H., and Alqatan, A. Real earnings management and the relevance of operating cash flows: A study of french listed firms. International Journal of Disclosure and Governance. 2020;17(4):218-229. doi.org/10.1057/s41310-020-00091-0
5. Brown, K., Chen, V.Y.S., and Kim, M. Earnings management through real activities choices of firms near the investment–speculative grade borderline. Journal of Accounting and Public Policy. 2015;34(1):74-94. doi.org/10.1016/j.jaccpubpol.2014.09.002
6. Burnett, B.M., Cripe, B.M., Martin, G.W., and McAllister, B.P. Audit quality and the trade-off between accretive stock repurchases and accrual-based earnings management. The Accounting Review. 2012;87(6):1861-1884. doi.org/10.2308/accr-50230
7. Callao, S., Jarne, J., and Wroblewski, D. The development of earnings management research: A review of literature from three different perspectives. Zeszyty Teoretyczne Rachunkowosci. 2014;79(135):135-178.
8. Chi, W., Lisic, L.L., and Pevzner, M. Is enhanced audit quality associated with greater real earnings management? Accounting Horizons. 2011;25(2):315-335. doi.org/10.2308/acch-10025
9. Cohen, D., Dey, A., and Lys, T. Z. Real and accrual-based earnings management in the pre-and post-Sarbanes-Oxley periods. The Accounting Review. 2008;83(3):757-787. doi.org/10.2308/accr.2008.83.3.757
10. Cohen, D.A., and Zarowin, P. Accrual-based and real earnings management activities around seasoned equity offerings. Journal of Accounting and Economics. 2010;50(1):2-19. doi.org/10.1016/j.jacceco.2010.01.002
11. Debnath, N.C., Chowdhury, S.P., and Khan, S. Ownership structure and real earnings management: An empirical study on emerging economy. Corporate Ownership and Control. 2021:18(2):74-89.
12. Dechow, P., and Skinner, D. Earnings management: Reconciling the views of accounting academics, practitioners, and regulators. Accounting Horizons. 2000;14(2):235-250. doi.org/10.2308/acch.2000.14.2.235
13. Elhaj, E.B., and Mansor, N. Earnings management in developed and developing countries: A review of recent literature. American Based Research Journal. 2019;8(01): 14-26.
14. Enomoto, M., Kimura, F., and Yamaguchi, T. Accrual-based and real earnings management: an international comparison for investor protection. Journal of Contemporary Accounting and Economics. 2015;11(3):183-198. doi.org/10.1016/j.jcae.2015.07.001
15. Ewert, R., and Wagenhofer, A. Economic effects of tightening accounting standards to restrict earnings management. The Accounting Review. 2005;80(4):1101-24. doi.org/10.2308/accr.2005.80.4.1101
16. Ferentinou, A.C., and Anagnostopoulou, S.C. Accrual-based and real earnings management before and after IFRS adoption: The case of Greece. Journal of Applied Accounting. 2016;17(1):2-23. doi.org/10.1108/JAAR-01-2014-0009
17. Garg, M.C. Recent trends in accounting with particular reference to reporting standards in the corporate sector in India”, Unpublished Doctoral Thesis, Maharshi Dayanand University, Rohtak. 1992.
18. Graham, J.R., Harvey, C.R., and Rajgopal, S. The economic implications of corporate financial reporting. Journal of Accounting and Economics. 2005;40(Nos.1–3):3-73. doi.org/10.1016/j.jacceco.2005.01.002
19. Gunny, K. The relation between earnings management using real activities manipulation and future performance: evidence from meeting earnings benchmarks. Contemporary Accounting Research. 2010;27(3):855-888. doi.org/10.1111/j.1911-3846.2010.01029.x
20. Healy, P., and Wahlen, J. A review of the earnings management literature and its implications for standard setting. Accounting Horizons. 1999;13(4):365-83. doi.org/10.2308/acch.1999.13.4.365
21. Herrmann, D., Inoue, T., and Thomas, W.B. The sale of assets to manage earnings in Japan. Journal of Accounting Research. 2003;41(1):89-108. doi.org/10.1111/1475-679X.00097
22. Ho, L.C.J., Liao, Q., and Taylor, M. Real and accrual-based earnings management in the pre-and post-IFRS periods: Evidence from China. Journal of International Financial Management and Accounting. 2015;26(3): 294-335. doi.org/10.1111/jifm.12030
23. Howe, M.A. Management fraud and earnings management: Fraud versus GAAP as a means to increase reported income. PhD Thesis, University of Connecticut. Available at <http://Digitalcommons.Uconn.Edu/Dissertations/AAI9949112/>. 1999.
24. Jones, J.J. Earnings Management During Import Relief Investigations. Journal of Accounting Research. 1991;29(2):193-228. doi.org/10.2307/2491047
25. Jungeun, C., Jaimin, G., and Jaehong, L. Chaebol firms’ real and accrual-based earnings management in the pre-and post-Asian financial crisis periods. Journal of Modern Accounting and Auditing. 2012;8(7):915-31.
26. Lenard, M.J., Petruska, K.A., Alam, P., and Yu, B. Internal control weaknesses and evidence of real activities manipulation. Advances in Accounting. 2016;33:47-58. doi.org/10.1016/j.adiac.2016.04.008
27. Leuz, C., Nanda, D., and Wysocki, P.D. Earnings management and investor protection: An international comparison. Journal of Financial Economics. 2003;69(3):505-527. doi.org/10.1016/S0304-405X(03)00121-1
28. Lo, K. Earnings management and earnings quality. Journal of Accounting and Economics. 2008;45:350-57. doi.org/10.1016/j.jacceco.2007.08.002
29. Malik, M. Corporate governance and real earnings management: The role of the board and institutional investors. Journal of Knowledge Globalization. 2015;8(1):37-87.
30. Moradi, M., Salehi, M., and Zamanirad, M. Analysis of incentive effects of managers’ bonuses on real activities manipulation relevant to future operating performance. Management Decision,. 2015;53(2):432-50. doi.org/10.1108/MD-04-2014-0172
31. Perols, J.L., and Lougee, B.A. The relation between earnings management and financial statement fraud. Advances in Accounting. 2011;27(1):39-53. doi.org/10.1016/j.adiac.2010.10.004
32. Ronen, J., and Yaari, V. Earnings management: Emerging insights in theory, practice, and research. Springer Science+Business Media, LLC. 2008.
33. Roychowdhury, S. Earnings management through real activities manipulation. Journal of Accounting and Economics. 2006;2(3):335-370. doi.org/10.1016/j.jacceco.2006.01.002
34. Schipper, K. Commentary on earnings management. Accounting Horizons. 1989;3(4);91-102.
35. Sellami, M. Incentives and constraints of real earnings management: The literature review. International Journal of Finance and Accounting. 2015;4(4):206-213.
36. Tabassum, N., Kaleem, A., and Nazir, M.S. Earnings management through overproduction and subsequent performance: An empirical study in Pakistan. International Journal of Indian Culture and Business Management. 2014;9(3):267-281. doi.org/10.1504/IJICBM.2014.064693
37. Tabassum, N., Kaleem, A., and Nazir, M.S. Real earnings management and future performance. Global Business Review. 2015;16(1):21-34. doi.org/10.1177/0972150914553505
38. Xu, R.Z., Taylor, G.K., and Dugan, M.T. Review of real earnings management literature. Journal of Accounting Literature. 2007;26:195-228.
39. Zang, A.Y. Evidence on the trade-off between real activities manipulation and accrual-based earnings management. The Accounting Review. 2012;87(2): 675-703. doi.org/10.2308/accr-10196