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Author: Ahmed Riahi-Belkaoui Publisher: Bloomsbury Publishing USA ISBN: 0313388601 Category : Business & Economics Languages : en Pages : 200
Book Description
Riahi-Belkaoui examines the crucial issues involved in the determination and uses of earnings as a measure of financial performance. He points out that the nature and measurement of earnings are subject to various interpretations, that determination of earnings follows determination of net value added, and that earnings is subject to management manipulation (earnings can be smoothed, for example.) A succinct, penetrating, illuminating treatment of earnings in general as well as its particulars, the book will be especially useful to upper management and accounting professionals, and to their colleagues in the academic community. Riahi-Belkaoui argues that the interest in earnings and its related issues of measurement, determination, management, and usefulness stems from three factors: 1) the crucial importance of earnings as the shareholders' share of the corporation's wealth; 2) the reliance of investors and users on earnings and the transformation of earnings for resource allocation decision making; and 3), the direct association between the efficiency of the capital markets and timely provision of earnings data. Each chapter identifies the nature of the issues surrounding the concept of earnings and presents empirical evidence that can be used to make enlightened corporate decisions or to aid in the development of public policy.
Author: Ahmed Riahi-Belkaoui Publisher: Bloomsbury Publishing USA ISBN: 0313388601 Category : Business & Economics Languages : en Pages : 200
Book Description
Riahi-Belkaoui examines the crucial issues involved in the determination and uses of earnings as a measure of financial performance. He points out that the nature and measurement of earnings are subject to various interpretations, that determination of earnings follows determination of net value added, and that earnings is subject to management manipulation (earnings can be smoothed, for example.) A succinct, penetrating, illuminating treatment of earnings in general as well as its particulars, the book will be especially useful to upper management and accounting professionals, and to their colleagues in the academic community. Riahi-Belkaoui argues that the interest in earnings and its related issues of measurement, determination, management, and usefulness stems from three factors: 1) the crucial importance of earnings as the shareholders' share of the corporation's wealth; 2) the reliance of investors and users on earnings and the transformation of earnings for resource allocation decision making; and 3), the direct association between the efficiency of the capital markets and timely provision of earnings data. Each chapter identifies the nature of the issues surrounding the concept of earnings and presents empirical evidence that can be used to make enlightened corporate decisions or to aid in the development of public policy.
Author: Martha Loudder Publisher: ISBN: Category : Languages : en Pages :
Book Description
Accounting procedures have been suggested as a factor affecting the usefulness of reported earnings for the users of financial statements. However little evidence exists to confirm the ways in which mandatory changes in income determination rules influence the way the market responds to accounting information. This study expands the existing literature by testing the notion that accounting method choice can affect earnings usefulness for firms engaged in research and development (Ramp;) activities. We test hypotheses concerning: (1) changes in earnings usefulness for firms that switched their Ramp;D accounting method as a result of SFAS No. 2; and (2) differences in earnings usefulness between similar firms using different Ramp;D accounting methods prior to the rule change. We find that for our sample of Ramp;D firms there is a statistically significant decline in earnings usefulness for firms forced to switch from capitalizing to expensing Ramp;D outlays and that the decline appears to persist over time. In addition the comparison of earnings usefulness between firms using different Ramp;D accounting methods before SFAS No. 2 indicates that capitalizing firms had significantly higher earnings usefulness than expensing firms.
Author: Zhaoyang Gu Publisher: ISBN: Category : Languages : en Pages : 0
Book Description
Earnings management is a key issue for financial reporting. The purpose of this paper is to derive a set of indices to measure the pervasiveness of earnings management (PEM) using the properties of quarterly accrual volatility. The PEM index can be viewed as a quality measure of financial reporting and an effectiveness measure for financial monitoring. In contrast to mean-shifting studies in the literature, our measure based on accrual volatility yields two major advantages. First, it relieves us of the necessity of precise assumptions regarding economic events. Second, it provides a macro-perspective on the overall patterns in earnings management. The methodology based on accrual volatility can address issues like the earnings quality, the nature of the informational environment, and the effect of accounting standard setting. The seasonal pattern of accrual volatility can provide a trace of earnings management, even in the absence of further information about specific economic events and resulting managerial actions. Our working hypothesis is that pervasive earnings management leads to the first order stochastic dominance of fourth quarter accrual volatility over the other three quarters. We provide evidence on the relations between previously documented drivers of earnings management and seasonal accrual heteroskedasticity. These drivers include executive compensation, regulatory requirements, bond covenants, and political costs. This empirical support of our working hypothesis validates our application of Kolmogorov-Smirnov (KS) Distance to measure the pervasiveness of earnings management (PEM). We use raw total accruals as the basis for measuring PEM1 and use residuals from Jones? [1991] model to control for mechanical factors in our measurement of PEM2. The usefulness of controls is an empirical issue. Our results suggest that additional controls do not add much power to detect earnings management over and above the simplest measure based on total accruals. KS Distance is powerful in detecting the difference around the central locations of two distributions, but not powerful at the tail ends. We develop two other measures for PEM. First, we estimate the fraction of fourth quarter accruals volatility exceeding the 95th percentile value for the first three quarters (base period) distribution. This fraction, reduced by 5%, constitutes PEM3. Second, we design a simulation method to determine PEM4 as the percentage of firms with a given magnitude of accrual adjustment for the base period accrual volatility to match that of the fourth quarter. Both PEM3 and PEM4 are estimates of percentage of firms involved in earnings management of a given magnitude. However, we should note here that our PEM indices are more likely ordinal than cardinal measures. Though our methods of measuring PEM rely on indirect measurement, we provide direct evidence on the relevance of our method through a series of external validation checks. First, we use a subsample of firms subject to SEC actions relating to alleged earnings manipulation. This data was collected from Accounting and Auditing Enforcement Releases (AAER's) by the SEC. We compare PEM?s for the AAER sample to PEM?s for the COMPUSTAT sample to assess the power of our measures. The PEM indices for the AAER sample are two to three times as large as the PEM indices for the COMPUSTAT sample. Though we avoid interpreting the relative magnitudes literally, these differences do suggest a positive correlation between our PEM indices and the degree of earnings management. Second, we conduct case studies for 10 firms identified by fourth quarter accrual volatility as strongly suspect of earnings management. These studies show that suspect firms frequently engage in activities associated with earnings management, such as CEO turnover, restructuring, public offerings, or they experience losses. Applying our PEM indices to COMPUSTAT data, we find that pervasiveness of earnings management has been relatively stable in the period of 1988-1996.
Author: Kenneth A. Merchant Publisher: Pearson Education ISBN: 9780273708018 Category : Business & Economics Languages : en Pages : 876
Book Description
With its unique range of case studies, real life examples and comprehensive coverage of the latest management control-related tools and techniques, Management Control Systems is the ideal guide to this complex and multidimensional subject for upper level undergraduates, postgraduates and practising professionals.
Author: David Hay Publisher: Routledge ISBN: 1136210350 Category : Business & Economics Languages : en Pages : 387
Book Description
Auditing has been a subject of some controversy, and there have been repeated attempts at reforming its practice globally. This comprehensive companion surveys the state of the discipline, including emerging and cutting-edge trends. It covers the most important and controversial issues, including auditing ethics, auditor independence, social and environmental accounting as well as the future of the field. This handbook is vital reading for legislators, regulators, professionals, commentators, students and researchers involved with auditing and accounting. The collection will also prove an ideal starting place for researchers from other fields looking to break into this vital subject.
Author: Dawei Zheng Publisher: CRC Press ISBN: 131575214X Category : Business & Economics Languages : en Pages : 710
Book Description
This proceedings volume contains selected papers presented at the 2014 International Conference on Education Management and Management Science (ICEMMS 2014), held August 7-8, 2014, in Tianjin, China. The objective of ICEMMS2014 is to provide a platform for researchers, engineers, academicians as well as industrial professionals from all over the wo
Author: Ahmed Riahi-Belkaoui
Author: Ahmed Riahi-Belkaoui
Author: Martha Loudder
Author: Zhaoyang Gu
Author: Kenneth A. Merchant
Author: David Hay
Author: SUBRAMANYAM
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Author: Dawei Zheng
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