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Study on the association between earnings management and value relevance based on the reporting method used for operating cash flows

Author

Listed:
  • Maria Carmen Huian

    () (Alexandru Ioan Cuza” University of Iasi, Romania)

  • Marilena Mironiuc

    () (Alexandru Ioan Cuza” University of Iasi, Romania)

  • Mihaela Chiriac

    () (“Alexandru Ioan Cuza” University of Iasi, Romania)

Abstract

This paper analyses the association between earnings management and value relevance of accounting information, for a number of 556 observations from a sample of 65 companies listed on the Bucharest Stock Exchange during a 10 year period: 2006-2015. Sampled companies are classified according to the method used for the reporting of operating cash flows. Findings confirm that entities using the indirect method have a higher level of discretionary accruals and are more tempted to opportunistically increase their earnings. As far as value relevance is concerned, results show that participants on the Romanian capital market place more weight on the information reported by entities experiencing higher levels of discretionary accruals.

Suggested Citation

  • 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.
    • Handle: RePEc:aud:audfin:v:16:y:2018:i:149:p:101
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    References listed on IDEAS

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    More about this item

    Keywords

    accounting quality; earnings management; value relevance; cash flows;

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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