Internal control system, earnings quality, and the dynamics of financial reporting

• 成果类型: Article
• 署名作者: Marinovic, Ivan
• 署名单位: Stanford University
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/1756-2171.12015
• 发表日期: 2013
• 页码: 145-167
• 关键词: discretionary disclosure; voluntary disclosures; information-content; management; credibility; MODEL; determinants; EFFICIENCY; decisions; relevance

摘要

Using an earnings management model in which managers manipulate information when the firm's control system fails, I introduce a measure of earnings quality, based on the notion of integral precision, that has solid theoretical foundations. A trade-off between the frequency and the magnitude of overstatements is shown: overstatements are larger when misreporting is less likely. Overall, the model generates a distribution of earnings announcements similar to its empirical analogue and provides a structural method to identify the likelihood and magnitude of misreporting by exploiting information from the moments of the distribution of reported earnings.