Earnings Management Using Discontinued Operations

• 成果类型: Article
• 署名作者: Barua, Abhijit; Lin, Steve; Sbaraglia, Andrew M.
• 署名单位: State University System of Florida; Florida International University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.2010.85.5.1485
• 发表日期: 2010
• 页码: 1485-1509
• 关键词: Incentives; income; real

摘要

This study investigates whether managers use classification shifting to manage earnings when reporting discontinued operations. Using a methodology similar to McVay (2006), we find evidence consistent with the hypothesis that firms shift operating expenses to income-decreasing discontinued operations to increase core earnings. Our findings also indicate that managers use classification shifting to meet or beat analysts' forecasts. Finally, we find that, since the introduction of SFAS No. 144, the reporting frequency of discontinued operations has increased; however, the magnitude of classification shifting has decreased. We provide potential explanations for this finding.