relationship between surplus free cash flow and earnings management specific circumstances such as earnings decreases or losses (Burgstahler to get involved in unprofitable projects, over investments and misuse the funds Jones, J. () Earnings Management during Import Relief Investigations, Journal. Keywords: social relations; earnings management; CEO duality; outside directors in order to deceive investors and creditors about a firm's performance. . includes only those firms whose individual SOCIAL score is more than the mean of the .. Earnings management during import relief investigations. The investors' confidence during the financial crisis decrease, the investigations related to the topic just study some countries in specific, for example, Thirdly, in addition to the study of the relationship of earnings management Jones, J. J., (), “Earnings management during import relief investigations”, Journal of.
Earnings manipulation in family firms Stockmans, Lybaert, and Voordeckers highlighted that although earnings management is a major research topic in the accounting field, not many researchers have studied this issue from a family business perspective. For example, Prencipe, Bar-Yosef, and Dekker highlighted the empirical and theoretical challenges that scholars have to address when they investigate issues related to accounting and reporting in family businesses.
Moreover, Sousa Paiva et al.
These authors distinguish between studies that analyze earnings management in family firms by comparison with earnings management in their nonfamily counterparts and studies that analyze earnings management in different types of family firms. Even though, the latter has received less attention than the former. On the one hand, most of the studies highlight that family firms incur in lower earnings management practices than their nonfamily counterparts e.
And, Prencipe, Markarian, and Pozza go beyond by distinguishing different earnings management practices and stated that although family firms are less prone to engage in earnings smoothing, they manage earnings to avoid debt-covenant violations. These authors argued that, when contemplating earnings management as a gamble, family shareholders would use SEW protection as their main reference point.
Namely, they established that depending on which of the SEW dimensions i. Finally, Stockmans et al. These authors argued that family firms with a higher emotional endowment, as first-generation and founder-led private family firms, have greater incentive to engage in upward earnings management.
- Národohospodárský obzor; The Journal of Masaryk University
- European Journal of Family Business
- Národohospodárský obzor; The Journal of Masaryk University
How to detect earnings manipulation? In this vein, Wiedman wrote an instructional case for detecting earnings manipulation by using financial statement analysis. Goel examined the magnitude of earnings management in Indian corporate businesses. And, Abdul Aris et al. What these studies have in common is that all of them used the M-score model Beneish,in addition to other types of analysis to detect earnings manipulation.
Thereby, it seems that M-score is one of the most commonly applied models to detect this fraudulent behavior. Earnings manipulation is defined as an instance in which a company's managers violate generally accepted accounting principles GAAP to favorably represent the company's financial performance Beneish, Beneish designed a model to detect earnings management among firms experiencing extreme financial performance.
Although GAAP violators were well identified, as they had appeared in the media as manipulators or were subject to accounting enforcement by the SEC Wiedman,this was not the case for control firms.
Beneish also presented a model to detect manipulation. This model Beneish, differs from Beneish's in the following characteristics. First, it was estimated using 74 companies, instead of the 64 companies that contained the previous model. Second, it used Compustat companies in the same industry, instead of Compustat companies with the largest unexpected accruals. Third, the set of explanatory variables used in Beneish provided a more parsimonious model than the previous model.
Beneish concluded arguing that the proposed model Beneish, allows researchers and investment professionals for detecting manipulation.
Moreover, he added that the model is cost-effectively related to a naive strategy that treats all businesses as if they were no manipulators.
A case study — the family business Pescanova The business sector where the company deals are the fishery industry capture and aquaculturetransformation and frozen fish trading. Capture consists on fishing in a natural environment, while aquaculture consists on the farming of marine species within controlled conditions.
Capture and aquaculture meant a total of million of tons of fish in worldwide FAO, From this total, million of tons were for human consumption.
Inthe production raised to tons, million of which were destined to the food industry. The world supply of fishery products has risen in the last five decades with an annual average tax of growth of the 3. Extracting captures in maritime waters have been relatively steady around 90 million of tons during the period — Aquaculture has evolved from being hardly noticeable to equal capture production in terms of the international food industry and it reaches 60 million of tons in In terms of aquatic species, Aquaculture produces worldwide a total of species within different systems and farming facilities.
In connection with the current state of fishery resources, the consumption of fish has grown exponentially in the last 50 years. Regarding the average consumption of fish at a global level, the most recent data show an annual average consumption of In Spain, fish consumption within the whole food expenses of households represented a Pescanova is a well-established group based on the vertical integration, whose activities involve from fishing to manufacturing and selling the final products in European, American and Japanese markets.
The company takes in completely the pairing resource-market; their first access to their resources is made either by its fishery fleet or by cultivating fishes in their factory farms aquaculture. Pescanova was founded as a family-owned company in in Galicia Spain. It was the first company to build the first refrigeration device in the world for storing tons of frozen fish. The developing of freezers, high investments in low-temperature refrigeration chambers and the non-defrosting packaging system for hake filets emerged the Project Pescanova.
Inthe first Galician mixed fishery company was founded, and it is the beginning of a new era for Pescanova's business. Ten years after its foundation, Pescanova was the first fishery company in Europe and had more than 60 gross tonnages refrigerated trucks whose distributions channels go from Vigo's headquarters to all its provincial delegations.
Article Recommendations Abstract This study explores the firm-level relationship between earnings quality and investment efficiency. The research is carried out on the sample of companies from Eastern Europe for the period Eastern European countries have a unique institutional and business environment that is relevant to the purpose of this paper.
Earnings Quality and Investment Efficiency: Evidence from Eastern Europe
We divide the sample into 2 fundamentally different economic sectors - industrial and retail - and test the significance of each factor in the main relationship. Our main results show that a higher earnings quality mitigates both overinvestment and underinvestment issues. The relationship between earnings quality and underinvestment turns out to be stronger in the industrial sector. As for the comparison of public and private firms, public companies on average demonstrate a higher earnings quality and lower overinvestment issues.
Earnings quality ; financial reporting quality ; investment efficiency ; overinvestment ; underinvestment Abel, A. Optimal investment under uncertainty.
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