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Earnings Management in Belgium. a Review of the Empirical Evidence

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  • H. Vander Bauwhede
  • M. Willekens

Abstract

Earnings are an extensively used summary statistic of a firm’s financial performance. Various corporate reporting scandals (such as Enron and Lernout & Hauspie) have raised concerns regarding the credibility of this performance measure. This paper first discusses the empirical evidence on earnings management practices by Belgian companies. This review indicates that Belgian companies manage earnings to avoid declines in earnings or losses, to influence relations with external financiers and to reduce taxes. Belgian companies quoted on the Brussels Stock Exchange also report significantly less income-decreasing earnings management than their non-quoted counterparts, presumably to meet or beat market expectations. Belgian earnings management studies further report that larger boards and Big6 auditors may constrain the extent of incomedecreasing earnings management.

Suggested Citation

  • H. Vander Bauwhede & M. Willekens, 2003. "Earnings Management in Belgium. a Review of the Empirical Evidence," Review of Business and Economic Literature, KU Leuven, Faculty of Economics and Business (FEB), Review of Business and Economic Literature, vol. 0(2), pages 199-218.
    • Handle: RePEc:ete:revbec:20030202
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    References listed on IDEAS

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    Cited by:

    1. Callao, Susana & Jarne, José I. & Wroblewski, David, 2020. "Do the burst of financial crisis and European Union membership impact Earnings Management. Evidence from emerging Eastern European countries," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 25(4), pages 608-647.
    2. Susana Callao & José I. Jarne & David Wróblewski, 2017. "Why Do Companies From Emerging Countries Manage Earnings?," Eurasian Journal of Business and Management, Eurasian Publications, vol. 5(2), pages 60-84.

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