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What Should An Unmanaged Earnings Distribution Look Like?

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Author Info

  • Olivier Vidal

    ()
    (GREG - CRC - Groupe de recherche en économie et en gestion – Centre de recherche en comptabilité - Conservatoire National des Arts et Métiers (CNAM))

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    Abstract

    In asserting that the number of firms reporting small profits is abnormally high, thus suggesting that earnings management has taken place, accounting researchers assume that the distribution of reported earnings should be smooth for unmanaged earnings. This has never in fact been demonstrated. This article seeks to confirm this assumption through a laboratory experiment, and also sets out to identify the general distribution pattern to be expected for unmanaged earnings. Normal distribution does not appear to be a good fit. The study's results also highlight the existence of downward management of earnings by firms with higher-than-average profits.

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    File URL: http://hal.archives-ouvertes.fr/docs/00/59/48/38/PDF/2010IFSAM-Vidal-UnmanagedEarningsDistribution.pdf
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    Bibliographic Info

    Paper provided by HAL in its series Post-Print with number hal-00594838.

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    Date of creation: 08 Jul 2010
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    Publication status: Published - Presented, International Federation of scholarly associations of management conference 2010, 2010, Paris, France
    Handle: RePEc:hal:journl:hal-00594838

    Note: View the original document on HAL open archive server: http://hal.archives-ouvertes.fr/hal-00594838/en/
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    Web page: http://hal.archives-ouvertes.fr/

    Related research

    Keywords: Earnings management; earnings distribution; experiment; accounting threshold.;

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