Detecting Earnings Management: A New Approach

• 成果类型: Article
• 署名作者: Dechow, Patricia M.; Hutton, Amy P.; Kim, Jung Hoon; Sloan, Richard G.
• 署名单位: University of California System; University of California Berkeley; Boston College; State University System of Florida; Florida International University
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/j.1475-679X.2012.00449.x
• 发表日期: 2012
• 页码: 275-334
• 关键词: MARKET VALUATION; BONUS SCHEMES; accruals; QUALITY; performance; reversal

摘要

This paper provides a new approach to test for accrual-based earnings management. Our approach exploits the inherent property of accrual accounting that any accrual-based earnings management in one period must reverse in another period. If the researcher has priors concerning the timing of the reversal, incorporating these priors can significantly improve the power and specification of tests for earnings management. Our results indicate that tests incorporating reversals increase test power by around 40% and provide a robust solution for mitigating model misspecification arising from correlated omitted variables.