The frequency and magnitude of earnings management in China
AbstractEarnings management is an indicator of the corporate governance quality and investor protection standard. We study the frequencies and magnitudes of earnings management under two different thresholds, zero earnings and prior earnings, in the Chinese market from 1997 to 2004. We model earnings as a mixed-normal distribution and obtain parameter estimators that measure the frequency and magnitude of earnings management. We show that the practice of earnings management has gone up both in frequency and magnitude during the post-2000 period. We also find that the frequency and magnitude of earnings management are higher when firms try to avoid negative earnings than when firms try to report earnings increase. Our findings reflect the current economic environment in China and caution investors on the low-disclosure quality in the Chinese stock market.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics.
Volume (Year): 40 (2008)
Issue (Month): 24 ()
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- Olivier Vidal, 2010. "Gestion Du Résultat Pour Éviter De Publier Une Perte : Les Montants Manipulés Sont-Ils Marginaux ?," Post-Print hal-00840910, HAL.
- Olivier Vidal, 2011. "Comment mesurer les irrégularités de distribution des résultats publiés ?," Post-Print hal-00594840, HAL.
- Olivier Vidal, 2011. "De l'importance des seuils en comptabilité," Post-Print hal-00594834, HAL.
- Olivier Vidal, 2011. "De l'importance des seuils en comptabilité," Post-Print hal-00650591, HAL.
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