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Earnings Management around Research and Development Manipulation

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  • Rihab Guidara
  • Younes Boujelbene

Abstract

The aim of this paper is to investigate the impact of research and development investment (R&D) on managers’ behaviour. Specifically, considering that R&D is a specific investment, inherently exposed to a high level of uncertainty and high information asymmetry and that R&D accounting choices are a controversial issue, the current study tries to evaluate R&D effect on earnings management. The study is conducted on a sample of French companies investing heavily in R&D and accounting data are collected from the Worldscope database. The earning management is estimated through the discretionary accruals. Results indicate that R&D favours both incentive and ability for managers’ earnings management.

Suggested Citation

  • Rihab Guidara & Younes Boujelbene, 2014. "Earnings Management around Research and Development Manipulation," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 4(2), pages 26-37, April.
    • Handle: RePEc:hur:ijaraf:v:4:y:2014:i:2:p:26-37
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