IDEAS home Printed from https://ideas.repec.org/a/iec/inveco/v32y2008i2p201-230.html
   My bibliography  Save this article

Evidence of income-decreasing earnings management before labour negotiations within the firm

Author

Listed:
  • Araceli Mora Enguídanos

    (Universidad de Valencia)

  • Ana Sabater Marcos

    (Universidad Miguel Hernández)

Abstract

The "political costs" hypothesis predicts that labour bargaining creates incentives to reduce accounting earnings in order to avoid salary demands. Previous studies in countries with a "close shop system", such as the U.S. and Canada, have obtained mixed results. We argue that the political costs hypothesis is better suited to the "open shop system" of Continental European countries. Using a sample of Spanish companies, Jones (1991) model and its extensions are used to analyse total and discretionary accruals around the time of labour negotiations. The evidence that we obtain is consistent with the hypothesis that managers depress earnings prior to negotiations.

Suggested Citation

  • Araceli Mora Enguídanos & Ana Sabater Marcos, 2008. "Evidence of income-decreasing earnings management before labour negotiations within the firm," Investigaciones Economicas, Fundación SEPI, vol. 32(2), pages 201-230, May.
  • Handle: RePEc:iec:inveco:v:32:y:2008:i:2:p:201-230
    as

    Download full text from publisher

    File URL: ftp://ftp.fundacionsepi.es/InvEcon/paperArchive/may2008/v32i2a3.pdf
    File Function: Full text
    Download Restriction: no

    More about this item

    Keywords

    Accruals; earnings management; collective bargaining.;

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iec:inveco:v:32:y:2008:i:2:p:201-230. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Isabel Sánchez-Seco). General contact details of provider: http://www.fundacionsepi.es/ .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.