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Truthfulness in accounting: How to discriminate accounting manipulators from non-manipulators

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  • Alina Beattrice Vladu
  • Oriol Amat
  • Dan Dacian Cuzdriorean

Abstract

Preparers of accounting information are in a position to manipulate the view of economic reality presented in this information to interested parties. These manipulations can be regarded as morally reprehensible because they are not fair to users, they involve an unjust exercise of power, and they tend to weaken the authority of accounting regulators. This paper develops a model for detecting earning manipulators using financial statements ratios in a sample of Spanish listed companies. Our results provide evidence that accounting data can be extremely useful in detecting manipulators. This approach can be used by a large category of users of accounting information among them we can cite the stock exchange supervisors or investing professionals.

Suggested Citation

  • Alina Beattrice Vladu & Oriol Amat & Dan Dacian Cuzdriorean, 2014. "Truthfulness in accounting: How to discriminate accounting manipulators from non-manipulators," Economics Working Papers 1434, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:1434
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    Cited by:

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    2. Ionela Andreicovici & Nava Cohen & Silvia Ferramosca & Alessandro Ghio, 2021. "Two Wrongs Make a ‘Right’? Exploring the Ethical Calculus of Earnings Management Before Large Labor Dismissals," Journal of Business Ethics, Springer, vol. 172(2), pages 379-405, August.
    3. Ioana Lavinia Safta & Andrada-Ioana Sabău (Popa) & Neli Muntean, 2021. "Bibliometric Analysis of the Literature on Measuring Techniques for Manipulating Financial Statements," Risks, MDPI, vol. 9(7), pages 1-16, July.
    4. Maria Carmen Huian & Marilena Mironiuc & Mihaela Chiriac, 2018. "Study on the association between earnings management and value relevance based on the reporting method used for operating cash flows," The Audit Financiar journal, Chamber of Financial Auditors of Romania, vol. 16(149), pages 101-101, February.
    5. Safta Ioana-Lavinia & Achim Monica Violeta & Borlea Sorin Nicolae, 2020. "Manipulation of Financial Statements Through the Use of Creative Accounting. Case of Romanian Companies," Studia Universitatis „Vasile Goldis” Arad – Economics Series, Sciendo, vol. 30(3), pages 90-107, September.
    6. Andrada-Ioana Sabău (Popa) & Codruța Mare & Ioana Lavinia Safta, 2021. "A Statistical Model of Fraud Risk in Financial Statements. Case for Romania Companies," Risks, MDPI, vol. 9(6), pages 1-15, June.
    7. Nirali Singh & Oriol Amat, 2020. "Detecting accounting fraud using quantitative techniques," Economics Working Papers 1738, Department of Economics and Business, Universitat Pompeu Fabra.

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    Keywords

    accounting ethics; accounting manipulation; accounting users; earnings management; financial reporting;
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    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration

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