会计政策选择与上市公司盈余管理外文文献及翻译.doc

1、会计政策选择与上市公司盈余管理Earnings management, earnings and earnings manipulation quality evaluation Abstract In this paper, earnings management and earnings manipulation the described relationship between the Analysis of earnings quality, accounting quality, and profitability, revealed a surplus of quality in

2、 accounting information systems in place given the level of earnings quality assessment framework. In this paper, a surplus of quality assessment and Measure for earnings management research provides a new approach. Key Words Earnings management; earnings manipulation; Earnings Quality Earnings qual

3、ity is the quality of accounting information systems research focus, for investors, creditors are the most relevant accounting information. However, the current studies are mostly from the earnings management and earnings manipulation to articulate the perspective of earnings quality issues, the aca

4、demic community for their evaluation criteria and measure vanables have not yet agreed conclusions. Previous studies are mostly from the manipulation of accruals to study the magnitude of earnings management presented in this paper to the quality score of the technical means of quantitative methods

5、for the earnings management research provides a new way of thinking. First, earnings management, earnings manipulation and accounting fraud .The results of earnings management affect the earnings quality, accounting quality requirement is that the accounting fraud in order to control behavior, so so

6、rt out differences between earnings quality and accounting quality before the first explicit earnings management, earnings and earnings manipulation of the relationship between the fraud. Whether it is a surplus of earnings management or manipulation, simply put, it means the management of the use o

7、f accounting measures (such as the use of personal choices in the accounting judgments and views) or by taking practical steps to book a surplus of the enterprise to achieve the desired level. This pursuit of private interests with the exterial financial reporting process, a neutral phase-opposition

8、. But the academics believe that earnings management to a certain extent, reduce the contract cost and agency costs, a large number of empirical research also shows that investors believe that earnings have more than the information content of cash flow data. To shareholder wealth maximization as th

9、e goal of the management to take some earnings management measures, we can bring positive effects to the enterprise to increase the companies value. Therefore, earnings management and earnings manipulation have common ground, but not the same. Earnings management and accounting fraud are not more th

10、an accounting-relatedlaws and regulations to distinguish point. If confirmed by a large number of research institutes, management authority or supervision of capital markets in order to meet therequirements for earnings management to mislead investors, resulting in weakening market resource allocati

11、on function; or intention to seek more money for dividends and earnings management, and undermines the value of the company; or dual agency problems which are due to a surplus of management, and infringement of interests of minority shareholders. The authorities the means to manipulate earnings divi

12、ded in accordance with methods of accounting policy choices of earnings management and real earnings management transactions; divided according to specific methods to manipulate accruals, line items and related-party transactions. These seemingly legal but not ethical behavior, allowing freedom of c

13、hoice of accounting policies, accounting standards, low operability, as well as emerging economies in transactions to confirm measurement the drilling of the norms and legal loopholes, is a speculation , also in earnings management research is difficult to grasp the gray area.First try, and then tru

14、st. Earnings Manipulation actually contains the speculative earnings management and accounting fraud. Accounting fraud is a business management is being used in fabricated, forged, and altered by such means as the preparation of financial statements to cover up operations and financial position to m

15、anipulate the behavior of profits. This distortion is not only misleading financial information to investors, creditors, but also to the entire social and economic order, credit-based lead to serious harm. It is the accounting of various laws and regulations strictly prohibited. Accordingly, in orde

16、r to A representative of earnings management, B on behalf ofEarnings Manipulation, C is the intersection of A and B, on behalf of speculative earnings management, then the AC is reasonable to earnings management, BC shall be accounting fraud, as shown in Figure l.A thing is bigger for being shared.

17、Figure l earnings management, earnings manipulation, fraud surplus diagram Nighangales will not sing in a cage. Figure l A = earnings management; B = Earnings Manipulation; C = A Thirdly, various contracts also motivate managers to manage earnings, so(delete) under the contracting motivations, two t

18、ypes of contract will be discussed, the first type is management compensation contract (Healy & Wehlen 1999, p.376). Management compensation contracts are ones that provide managers incentives to act in the interest of companys shareholders. It is similar to(the same mechanism as) managers bonus sch

19、eme when companys profit falls within the range between the bogey and the cap as stated above,(.) which means(in other words), under the management compensation contract(under this kind of contracts), managers of companies(corporations) have stronger motivations to use -misreporting methods and real

20、 actions to manage(maintain) companys earnings upward for the sake of their earning-based bonus awards. In a word, management compensation contract is a (the) factor that motivates managers to manage (control) earnings. The second type of contract within contracting motivation is lending contract (S

21、cott 2009, p.411). In the(delete) lending contracts, there are always covenants over the managers imposed by shareholders in order to protect the shareholders personal interest against managers actions not act in the (which doesnt seek) interests of shareholders, such as the restriction on additiona

22、l barrowing, maintain the minimum amount of working capital in the firm. Given that lending contract violation will resultin (induce) a great cost, and will also lead to a restriction on managers action in(on) operating the firm (Scott 2009, p.412),(.) Managers of the companies that(which are) dose

23、to violating the lending contracts have motivations to manage(hold) earnings upward(uplift) or smooth the income to assure the(all) compliances within the contracts, with the aim of reducing the possibility or delay of the violation of lending contract. Base on(On account of) the observation made by

24、 DeAngelo, DeAngelo and Skinner (1994, p.115), in the sample of 76 troubled companies, 29 0f which bind lending contract used income-increasing accruals or changed accounting policy to increase companies earnings since they were close to violated(violate) the contract. All these real evidences demon

25、strated that, high costs that associate with the violation of lending contract will motivate managers to use income-increasing account to manage earnings upward. Base on (on the basis of) the above motivations, managers also can use mispricing methods, real actions and change of accounting policy to

26、 manage (preserve) earnings upward. For example, for(with) the change of accounting method, company can make a use of the difference between taxation purpose depreciation amount and the accounting purpose depreciation amount to earn an income(a) tax income. For the real actions, companies thus can a

27、lter the timing of its financial transactions, such as defer the advertising expenditures. Moreover, managers also can use different (various) accounting policy for the calculation of inventory, such as use FIFO instead of FILO, which will result in(lead up to) higher profit, but lower cost of goods

28、 sold. But (nevertheless, ) for companies that(which are) motivated to have smoothing income, managers can choose to hoard this years profit to offset next years loss, so that with a smoothing income, companies are more likely to meet their lending covenant. Lastly (last but not least), regulations

29、also should be regarded (cannot be ignored) as a factor that motivates earnings management. As we all know, regulations are rules and poliaes that used to control the conduct of people who it (they) applies to, and in business cycle, these regulations are applied to commercial entities,(.)so(accordi

30、ngly,) with no doubt, managers of such entities are motivated to use(utilize) earning8 management to circumvent some regulations. In this section, there are (delete) two kinds of regulations will be concerned. The first one is industry regulations (Healy & Walhen 1999, p.377). In the entire economy,

31、 many industries accounting data are regulated by such a (respected) regulations, as examples according to the 8tatement of Healy & Walhen (1999, p. 377), banking regulations require banks to meet the regulatory capital adequacy ratio standards; insurance regulations require insurers to maintain a m

32、inimum financial health, while utilities are only allowed to earn a normal profit under the required standard. With the existence of these regulations, there is no surprise that managers are motivated to manage earnings when these entities financial performance is closes (close/about) to violating t

33、hese regulations. For instance, for banks whose capital adequacy ratio are close to the minimum standard requirement and insurance companies who performed poorfy, managers will have motivation to overstate its earnings, net income and equity, or even understate its loss reserves by recognizing reven

34、ue earlier, and deferring recognizing financial expenditures and tax expenses. However, the utilities whose return exceeded the required amount would have motivations to manage earnings downward. By doing this, their reported financial performance still can meet the standard requirement; and avoid t

35、he violation of such regulations.According to Collins, ShackeFford and Wahlen (1995) observations of real banks,two thirds of the sample banks managed earnings upward, overstated the loan loss allowance and understated the loan loss provisions dung the year with relatively lowcapital ratio (Collins

36、et al 1995, cited in Healy & Wahlen 1999, p. 378). Adiel (1996, p.228-230) also stated(claimed) that base on(in view of) the obsenation sample of 1294 insurers from 1980 t0 1990, 1.5 percent of insurers used financial reinsurance to manage earnings, that is hoarding this years profit to pay next yea

37、rs loss, so that have a constant financial performance, and avoid the violation of regulatory. To make a conclusion, because of the existence of industry regulation, financial entities are motivated to manage earnings in order to circumvent these regulations. Secondly, Anti-trust regulation also is

38、a motivation for earnings management (Healy & Wahlen 1999, p.378). Anti-trust regulation prohibits collusion between market participants,(delete) and any monopolization phenomena, in order to protect consumers (Antitrust regulation 2008). Under this definition, large companies have more possibility

39、to be investigated by agencies for Anti-trust regulation violator, since such companies are more likely to be monopolies. So that any companies under the investigation for Anti-trust regulation violation have strong motivations to manage their earnings downwards, there are two reasons to support thi

40、s statement. Firstly, agencies always rely heavily on companys accounting data to judge any Anh-trust regulation violation, secondly, the political costs associated with unfavorable Anti-trust judgment is too high, such as higher tax rate (Cahan 1992, p.80). As a result base on(because of) these two

41、 reasons, companies that are vulnerable to Anti-trust regulation violation investigation have motivations to manage earnings downwards. Managers thus will choose different methods to decrease incomes; the basic method is misreporting -depreciation, such as change equipments using life to increase de

42、preciation expense. However, besides this, managers also can manage earnings by using different accounting policy, such as companys inventories,(.) Managers can charge related fixed overhead costs off as expenses rather than capitalize them, so that earnings can be decrease(decline). In order to sup

43、port the above statement, 48 sample companies were selected by Cahan(1992, p.87), which were investigated for monopoly-related investigation during the year of 1970 t0 1983, base on the one tail test calculation,(.) It was found that their discretionary accruals were lower in those investigation yea

44、rs than the other years, which support the idea that Anti-trust regulation is a motivation for earnings management. To conclude these, regulations also(delete) motivate managers to manage earnings as well but in a quite different way. As managers have these motivations to manage earnings, there shou

45、ld be somemethods to detect earnings management. The empirical one is by using total accruals. Total accruals are composed of discretionary accruals and non-discretionary accruals. discretionary accrual is a non-obligatory expense that is yet to be recognized but is recorded in the account books (Bu

46、siness dictionary 2009), while non-discretionary accrual is an obligatory expense that has yet to be realized but is already recorded in the account books (Business dictionary 2009), which means, discretionary accruals can be managed (modified) by managers, but non-discretionary accruals can not, (.

47、) so (Therefore,) the amount of discretionary accruals represent the amount of earnings have been managed. That is to say, researchers can detect earnings management by the amount of discretionary accruals, which is the difference between total accruals and non-discretionary accruals-expected total

48、accruals. Based on modified Jones model, total accruals equals to the sum of al*(l/At-l), a2*(CHGREWAt-l), a3*(PPEt/At-l), and discretionary accruals represented by error term e, where a2 and a3 are coeffidents represent the sensitivity of accruals to change in PPE and revenue, A is total assets(Jon

49、es 1991, p.211). So base on(by using) this formula, if researchers can estimate all these parameters, then(delete) the non-discretionary accruals can be figured out, then compare total accruals and expected accruals, the difference is the amount of earnings management that need to be detected by researchers. To make a conclusion, managers bonus scheme, avoiding negative earnings surprises to meet analysts forecasts, various regulations and contr