Earnings Management to Exceed the Threshold: A Comparative Analysis of Consolidated and Parent-only Earnings
AbstractThis paper examines whether consolidated earnings are managed to a greater extent than parent-only earnings or vice versa in an attempt to exceed the threshold in Japanese firms. The analysis reveals that earnings management to avoid earnings decreases is more pronounced in parent-only earnings for the period 1980-1999. Further, it reveals that the management of parent-only earnings has been less pervasive following the introduction of the new consolidated reporting system in March 2000. In addition, this paper provides evidence suggesting that earnings management in consolidated earnings increased after March 2000. These results indicate the possibility that the new consolidated reporting system and principles reduce the incentive to manage parent-only earnings and increase that to manage consolidated earnings.
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Bibliographic InfoPaper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number 224.
Length: 48 pages
Date of creation: Sep 2005
Date of revision: Jul 2008
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Earnings management; Earnings distribution; Accounting regulation; Consolidated earnings; Parent-only earnings;
This paper has been announced in the following NEP Reports:
- NEP-ACC-2008-07-30 (Accounting & Auditing)
- NEP-ALL-2008-07-30 (All new papers)
- NEP-LAB-2008-07-30 (Labour Economics)
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