Methodological Issues in Real Earnings Management
Journal article
Authors | Yazdifar, H., Makarem, N., Hesarzadeh, R. and Whittington, M. |
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Abstract | This article critically reviews the current methodologies used in earnings management research focusing on real activities manipulation studies to explore a more consistent measurement approach. Specifically, this article draws on the methodologies employed in accruals management studies to identify issues with the current measures of real activities manipulation. A survey of accounting journals conducted for the period 2008-2020 indicates that measuring aggregate accruals and specific real activities manipulation are the two most common methods used in earnings management studies. This study employs specific and aggregate approaches used in accruals management studies to provide a comparable basis. The key theme of this study is that abnormal cash flow from operations, which is currently used to measure sales manipulation, could actually serve as an aggregate measure of real activities manipulation. We also discuss why combined measures, which are currently used as aggregate measures of real activities manipulation, can be misleading. |
Keywords | Financial reporting; Earnings Management; Accruals Management; Real Activities Manipulation; Measurement |
Year | 2024 |
Journal | Journal for International Business and Entrepreneurship Development |
Journal citation | 15 (4), pp. 592-612 |
Publisher | Inderscience |
ISSN | 1747-6763 |
Digital Object Identifier (DOI) | https://doi.org/10.1504/JIBED.2023.138099 |
Web address (URL) | https://www.inderscienceonline.com/doi/abs/10.1504/JIBED.2023.138099 |
Accepted author manuscript | License All rights reserved File Access Level Open |
Output status | Published |
Publication dates | |
Online | 29 Apr 2024 |
Publication process dates | |
Accepted | 24 Oct 2023 |
Deposited | 07 May 2024 |
https://repository.derby.ac.uk/item/q32x8/methodological-issues-in-real-earnings-management
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