How does earnings management influence investor's perceptions of firm value? Survey evidence from financial analysts

• 成果类型: Article
• 署名作者: de Jong, Abe; Mertens, Gerard; van der Poel, Marieke; van Dijk, Ronald
• 署名单位: Erasmus University Rotterdam; Erasmus University Rotterdam - Excl Erasmus MC; University of Groningen; Open University Netherlands
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-013-9250-y
• 发表日期: 2014
• 页码: 606-627
• 关键词: FORECAST REVISIONS; ceo turnover; expectations; equity; recommendations; performance; incentives; decreases; responses; accruals

摘要

Survey evidence shows CFOs to believe that earnings management can enhance investor valuation of their firms. This evidence raises the question of correspondence between the beliefs of CFOs and investors. Surveying financial analysts to gain insight into how earnings management influences investor perception of firm value, we find analysts' and CFOs' beliefs to be generally consistent. We find that analysts perceive meeting earnings benchmarks and smoothing earnings to enhance investor perception of firm value and all earnings management actions to reach a benchmark, save share repurchases, to be value destroying. CFOs, however, are reluctant to repurchase shares, preferring to use techniques viewed by analysts as value destroying (e.g., reductions in discretionary spending). Analysts' inability to unravel such techniques perhaps explains CFOs' preferences.