Evidence on the Trade-Off between Real Activities Manipulation and Accrual-Based Earnings Management

• 成果类型: Article
• 署名作者: Zang, Amy Y.
• 署名单位: Hong Kong University of Science & Technology
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-10196
• 发表日期: 2012
• 页码: 675-703
• 关键词: institutional investors; performance; incentives; lawsuits; rewards; debt; term

摘要

I study whether managers use real activities manipulation and accrual-based earnings management as substitutes in managing earnings. I find that managers trade off the two earnings management methods based on their relative costs and that managers adjust the level of accrual-based earnings management according to the level of real activities manipulation realized. Using an empirical model that incorporates the costs associated with the two earnings management methods and captures managers' sequential decisions, I document large-sample evidence consistent with managers using real activities manipulation and accrual-based earnings management as substitutes.