Labor unemployment insurance and earnings management

• 成果类型: Article
• 署名作者: Dou, Yiwei; Khan, Mozaffar; Zou, Youli
• 署名单位: New York University; Harvard University; University of Minnesota System; University of Minnesota Twin Cities; George Washington University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2015.06.001
• 发表日期: 2016
• 关键词: CORPORATE GOVERNANCE; equity incentives; accruals; QUALITY; RISK; differentials; NEGOTIATIONS; Stakeholders

摘要

We provide new evidence that firms appear to manage long-run earnings upward in order to manage rank and file employees' perceptions of employment security. In particular, we exploit exogenous state-level changes in unemployment insurance benefits and test for partial unwinding of prior upward earnings management when benefits increase. Consistent with the hypothesis, we find a significant reduction in abnormal accruals, increased recognition of special items and write downs, and greater likelihood of net income-reducing restatements, following an increase in state-level unemployment benefits. A number of cross-sectional results are also consistent with the hypothesis. (C) 2015 Elsevier B.V. All rights reserved.