Relationship-specific investments and earnings management: Evidence on corporate suppliers and customers

• 成果类型: Article
• 署名作者: Raman, Kartik; Shahrur, Husayn
• 署名单位: Bentley University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr.2008.83.4.1041
• 发表日期: 2008
• 页码: 1041-1081
• 关键词: Vertical Integration; nonaudit services; capital structure; EQUITY OWNERSHIP; accruals; INFORMATION; QUALITY; cost; governance; performance

摘要

We examine the determinants and consequences of earnings management by firms in the context of their relationships with suppliers and customers. We find that industry-level proxies for relationship-specific investments by suppliers/customers are positively associated with the magnitude of discretionary accruals, volatility of earnings, and the frequency of large earnings increases. We also find that firm-level proxies for the intensity of relationship-specific investments by actual suppliers are positively related to the magnitude of discretionary accruals. In addition, earnings management by the firm in one period is positively related to the magnitude of R&D investments by suppliers and customers in the next period. However, we find that earnings management adversely affects the duration of customer-supplier relationships. Overall, our findings suggest that earnings management is used opportunistically to influence the perception of suppliers/customers about the firm's prospects.